How Do You Make a DC Intellectual Look Less Articulate Than Sarah Palin Being Interviewed by Katie Couric?
That's easy. You ask them how failure to pass the bailout will give us a Great Depression.
The odds are that your favorite DC intellectual type has uttered some dire warning like that. After all, they all heard some authority like President Bush or a highly respected news reporter make such a claim. All right-thinking people know that we just have to give $700 billion to the Wall Street crew or the economy will collapse.
While all right-thinking people might know we need the bailout, just about all right-thinking people don't have a clue as to what they are talking about.
The Great Depression story is of course the most extreme case. No one has yet sketched out the sequence of events that will give us ten years of double-digit unemployment. But hey, if the scare story helps get the bailout passed -- and gets those uneducated skeptics in the hinterlands to buy it -- why not talk about the Great Depression?
I was on a talk show today in which one of the other guests (a representative of the security industry trade group) told listeners that you can't get a mortgage unless you put 30-40 percent down. This is of course total garbage (the interest rate on 30-year fixed rate mortgages is a very low 6.0 percent) and the vast majority of loans are being made with 10-20 percent down, but lying for Wall Street is no sin.
The host of the show was appalled to find that neither I, nor the other in-studio guest, supported the bailout. At one point he became exasperated and told me that because companies can't get access to credit they might have to lay off workers. He told me that United and GM may have to begin laying off workers next month if the credit squeeze doesn't ease.
Of course if United and GM actually do lay off workers, the credit squeeze will be a very small part of the story. The airline and auto industry face really big problems for reasons that have nothing to do with the credit squeeze, although paying higher interest rates on borrowing clearly does not help.
It is remarkable how the contemptuous comments that the elites have directed at the masses for opposing the bailout can be so much more accurately directed back at themselves. In fear and anger they have embraced a bailout that makes little sense in the context of the economic crisis facing the country. Rather than listening people who actually understand the economy (I doubt a single economist in the country believes that the bailout is the best way to help the economy) they have shouted down and shut out critics of the bailout and have been willing to spread all manner of outlandish scare stories to advance their case.
It was impressive to see the mass outrage over the bailout at least temporarily stop the bill. But, the full court press by Wall Street, the media and the entire political establishment is hard to counter. If the bill is not stopped, those who vote for it should at least be held accountable for the economic mess they create. Remember, these are the folks that couldn't see the housing bubble.
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October Surprise? This is it! One last chance for 'W' to fleece us all for the sake of his Billionaire Base. Dean Baker is right.
And, once again... I am constrained to point out that Democrats, including Obama and Biden are fully on board with Bush in this bail out..
The Democrats are MORE responsible for this crisis than Bush and the Republicans.
Just ask Clinton...
Michale.....
And so is McCain, or did he flip-flop again? Also, McCain-Gramm are reponsble for gutting the regulations that would have prevented this from happening.
I think the word you want is "compelled" not "constrained".
I don't think anyone is holding you back...
I cannot think of a time that there is more documented proof of the lack of credibility and accountability of an administration. I voted for Bush and I wanted to believe in the weapons of mass destruction, I wanted to believe that the +$10bln a month we are spending on the War in Iraq didn't have a recessionary affect on the economy, I wanted to believe that the Fed and Treasury Secretary knew the difference between quality loans and "toxic" unsecured loans and could oversee and manage the appropriate risk to reward ratio, and I wanted to believe that the SEC chairman always knew that naked short selling was illegal.
Rather than bail everyone involved out, I would rather see lawmakers work on appropriate lending rules and regulations between the Fed, Frannie Mae and Freddy Mac, independent financial corporations, businesses, homeowners, and individuals to help ensure future economic stability. In my opinion, many senators and congressmen are falsely hoping that +$700 bln will keep our free market from seeking its natural equilibrium. This type of legislation will mask the true market valuation of these toxic loans in the short term but it will not prevent the market from adjusting to the real value of these assets longer term (6 months or less). I further believe that we cannot return to sustainable economic growth until the market reflects the true value of our current economic situation. I'd rather take my medicine now rather than remain ill for another six months.
The medicine is being offered to you, but you refuse to take it.
Franklin Roosevelt bought the homes of those people that could no longer pay for them. When he got the country rolling again, the value of the homes went up so that even with those that did not stay in their homes, those homes were resold at a profit.
There are currently about $1.26 Trillion in sub-prime mortgages. Not to mention the about $1.0 Trillion in Alt A (Liar Low/No down) loans. That's a lot of potential homes for the government to buy at face value and resell at a discount. Are you sure you have the best solution? Are you sure you understand the Paulson plan?
Franklin Roosevelt bought the country out of the Great Depression by TAXING THE RICH, not the poor, for which he was reviled as a "Traitor to his Class".
This is the last grasp of the greatest robbery in the history of the world. We've been cleaned out and indentured for generations to foreigners who run the Federal Reserve. America didn't need to be conquered in battle. All she needed was a corrupt administration who sold her out, lock, stock and barrel and managed to take a cut for themselves.
Now is the time for a Progressive push for Regulation, get it now while the issue is alive in the publics mind.
Unless regulation is incorporated, there is no change in the behavior.
There isn't a problem with this article. The problem is with those who think we "must" bail-out Wall Street and its banks. They are the ones who "must" produce evidence they are right. So far they haven't. On the contrary having the Fed grant direct loans to the local banks to provide credit to credit worthy entities will do far more then any bail-out will for the economy.
The reason it's called a bail-out is because it will save those entities that caused this problem. We don't need them saved. We need to let them go belly up and come up with a different means of providing credit to those who deserve it. Wall Street and its banks by their actions have shown themselves "not" to be credit worthy.
Stop trying to save those who caused all these problems.
Okay, so let me get this straight: you are in favor of allowing every major US bank to fail? You clearly don't understand the problem if that is what you are suggesting. That would bring the entire US economy to a screeching halt. What do you suggest as a "different means of providing credit"?
This mis-named bailout is not because the average person can't get credit. It is because the companies that pay the paychecks of the average person can't get credit. Not because they're not credit-worthy, but because the large banks, that you want to see go belly up, cannot release any credit right now. We cannot allow all of the major banks to fail. That is what people mean when they say "financial Armegeddon." Those banks are needed. You can hate them all you want, but they are needed by everyone.
A bill that doesn't address the cause of the problem will fix the problem. Wow! Who woulda thought!
That's why Congress will have to "revisit" the issue later on, "revisit" as in more taxpayers' money.
If you re-read my comment you will see that I stated the Fed should give credit directly to local banks. Now if that means every major US bank will fail, then it should. The American Taxpayer cannot afford to rescue them. If major banks fail, smaller banks will grow and fill the void. The main thing is to provide capital so the economy grows instead of collapsing. If the bail-out goes through we are looking at a ten to thirty year recession as the taxpayers are forced to whittle down the national debt to a manageable level.
I would prefer that we not bail out the folks who made this mess but at least if we do bail this out these phoney capitalists, we must have am admission, once and for all, that we do not have a capitalist system. Many have observed the we have privatized profit and socialized risk. The term "too big to fail" is an admission that this isn't capitalism. If they can't fail then then they don't deserve any profit because they took no risk. The right wingers are right-----this is socialism. The only problem is that it socialism for the rich and dog eat dog capitalism for the rest of us. A condition of the bail out should be socialized medicine-------single payer-------medicare for everyone.
You are correct. "The problem is with those who think we "must" bail-out Wall Street and its banks." Obama "must produce evidence" that he is "right."
"No one has yet sketched out the sequence of events that will give us ten years of double-digit unemployment."
Note to DB: as you surely know, we've had double-digit unemployment for over 5 years already!
From MSN: ""Real unemployment right now -- figured the way that the average person thinks of unemployment, meaning figured the way it was estimated back during the Great Depression -- is running about 12%."
"In August, the real black unemployment reached 15.6%"
For reasons unknown, even respected authorities like DB seem to forget that we're dealing with the most dishonest administration in our history - which means the "official" unemployment numbers are total bullshit as well. Safe to say, double whatever number the Fed reports.
show them a picture of nancy pelosi or cynthia mckinney.
But, but, but, I thought that folks living on credit was the problem--and why raise FDIC security when Americans have zero saving rate?
Pesky details... Don't you know that Ma and Pa won't be able to go out to supper Friday night and Johnny needs a new pair of shoes...that is what the senator on the floor was preaching.
Hank Paulson sounded worse than Palin or even Fredo Gonzales when he couldn't give an informative answer to any question, just danced around with obfuscation...that seems to be a Republican mandate, LIE.
I'll bet SNL could make great hay of the Treasury Secy's fumble mumble "OH great disaster awaits us if we don't give Wall Street most of our hard earned tax money." Booooo
Who is writing the captions at the bottom of the screen at c-span? For that matter, who is writing Hillary Clinton's speeches ? I ask because in both cases, they refer to the $700 billion bailout being used to buy bank debt. Well, bank debt is our deposits. Bank assets are the so called toxic mortgages that the bailout is said to be used for. If they don't know the difference between debts and assets....well lord help us.
On a traditional balance sheet, debt is perceived as an asset for a lender, not a liability.
One of the reasons for this is that, traditionally, debt was usually guaranteed to be repaid.
If it was not, there would be hell to pay for the borrower if it wasn't - a lowered credit rating, inability to borrow more money at an attractive interest rate, etc.
There are those at this point who would blame the borrower for this mess.
That is not taking into account the mostly unregulated, unoverseen and in many cases downright scurrilous acts of the lender.
Strict regulation needs to be reinstated to protect the American taxpayer, many of whom borrowed this money in good faith in the first place.
Wonder if this will end up being Obama's Hillary-voted-to-give-Bush-a- blank-check-on-invading Iraq moment. May he rue the day. Meanwhile Robert Rubin will simply attach himself to the next dupe.
Roosevelt he ain't.
If he were alive today, JFK would not have taken his marching orders from Henry Paulson as George W. Bush has done. Unfortunately, that also means that Barack Obama, much as I admire him, is no JFK.
If you recall, Robert Rubin was instrumental in the success of the Clinton Administration's economic program that gave us the best 10 years of economic health in our history. It is my hope that, since Obama has him on his team, Rubin has thoroughly reserached and analyzed this bill and is advising Obama on the same.
I was totally against the initial "blank check" bill but, some protective measures have been included that make it at least pallatable to most. To use the medical metaphor, first you stabilize the patient, then you deal with the cure. My hope is that, once this has calmed the waters and we elect Obama, we can go forward with a cure for this diseased system. I am sure tha drastic measures will be needed in the very near future.
Bill spoke today in Florida and urged to pass the bill so we can move forward. I am as doubtful as the rest of America but, I do trust that the team that gave us a balanced budget, full employment and economic wellbeing at all levels of society know what they are doing.
Well, it is not that complex for Palin to win the debate: just claim after the debate that that Black woman Ifil was unfair to poor little Ms Palin. The fix was in. The McCain group is already saying they did not know about her authorship of a political (social) book.They are also trying in such subtle ways trying to get Ifil to ask simplistic questions, don't challenge any of her answers.
I agree with midhenry re credit availability and the banking industry.
Why is this not the main direction of our concern? This affects all of us. It is my understanding that this is the driver of our economy. When I give my bank a deposit it then loans some of my money (which will be repaid in interest) to someone else... and so on.
I see the domino effect here and certainly the stock market is part of the picture.
I for one am in favor of breaking the stalemate... but now that our representatives are dragging their well known and worn out feet we may have some time to think before hysterically leaping.
it is an absolute indictment of ALL leadership in this country that the economic challenges before us are being played out in the media instead of through a transparent dialogue with the American people.
NO ONE in government has taken the time to comprehensively explain to us, in language we can understand, what problems we face and the options we have to fix them.
Sure, we've heard a lot about the "Credit Crunch, "Wall Street Bail Out" and "Golden Parachutes," but if you were to ask them, most Americans would give you a variety of opinions as to how we got into this mess...and a large portion of those opinions would be incorrect.
Maybe those who are rising up against the bail out are correct, maybe they're not. Maybe the politicians who are voting against the plan are doing so because they honestly believe it is the wrong course; perhaps it's more out of political motivation and re-election.
IF THERE IS A LEADER IN THIS COUNTRY, WOULD HE OR SHE PLEASE STAND UP and not only call for, but demand, public hearings that would include feedback from the country's best economists. - and in so doing, inform the American people, discuss the problems at hand and find the best remedy possible in the circumstances.
Please.... Credit Crisis does not equal Credit Addiction.
"Credit Crisis" means that the lifeblood of business worldwide is drying up. We are talking about normal, well run, financially solvent, prudent businesses not being able to get the short term credit that is inherently essential to their day to day operations.
The LIBOR (London Inter Bank Offer Rate) hit an all time high of 5.07% today. Libor is the rate that banks use to loan to each other. Normally the Libor is within a few basis points of the Fed Funds rate, which is currently 2%. This is real bad.
This from Bloomberg this morning:
"There's a complete breakdown now of credit markets, and there is now a lack of trust in any counterparty, even the safest ones,'' said Nouriel Roubini, chairman of Roubini Global Economics and an economics professor at New York University's Stern School of Business. ``No one is lending to anyone else. It's a complete breakdown of the interbank system. It's really scary.''
The problem with Dean Baker's article is that it is all compaining with no soultion offered.
It is like two surgeons arguing about a patient who has a clogged artery and is coming close to a heart attack. One surgeon wants to go in and clear out the artery and install a stent right away. The other offers the opinion that we should wait and see if the patient does indeed suffer a heart attack before doing anything. If I were the patient I would take the former over the latter.
The solution is STRONGLY implied! LET IT RIDE. I totally agree. The market will not crash. The average American will indeed survive.
Thank you for the third surgical opinion. In the face of the fact that a clogged artery WILL give you a heart attack, you are saying that the patient will never suffer a heart attack!. I certainly would NEVER depend on you for advice if I were the patient.
How will the average American survive when they aren't receiving a paycheck anymore? Very few Americans have enough savings to survive more than a few months.
Baker doesnt need the bill to stay above water and while Krugman and Buffet dont either they supported Mondays bill .It looks to me like the far left and far right bumped into each other and threw the monkywrench in the rescue bill.Some so called experts ,who from what I could tell call themselves progressives ,were on C-span last night mostly dissing this bill.Baker was one of them.
Your analogy is flawed:
First, I don't think the surgeons completely agree on the diagnosis, let alone the prognosis for the patient's continuing condition, treated or not.
Second, a brief blog post is hardly the best place to lay out a comprehensive analysis, much less a prescription for cure. The point of the post was to highlight the fact that *no one in the public eye is even seeking a second opinion*!!!
Re: "no solution offered" -- The blogs and headlines hardly seem the best place to be debating the details of economic policy. But since no one in a position of responsibility seems willing or able to actually consider asking an exppert opinion (and the culprits most emphatically do not count!), I applaud Baker for pointing out the naked emperor strolling down Wall Street.
Or pehaps there analogy is that one wants to wait-and-see, and the other wants to do a new, super-expensive experimental procedure that no one knows will work -- and that there are supsicions that he wants to do it for his/her own benefit moreso than the patients'.
Your "patient" was fortunate to have the resources and time to think about and critically evaluate the options. That is a good thing.
The financial system, as represented by the "patient" in your example, should use appropriate resources and time to evaluate all the options. That would be a good thing.
My "patient" has until Friday. Then what?
Perhaps we do need to do something, but we shouldn't be pressed into a bill that will not actually solve the problems we face. From what I understand, the bill that failed did not do ANYTHING for the citizens, it would have allowed Paulson to purchase ANYTHING, even assets overseas - real estate, stocks, etc. Why should US tax dollars be used to purchase distressed overseas assets? That makes absolutely no sense.
We need to create more jobs by having the government include in this bill a plan to implement green energy. We DO need to force renegotiation of certain loans that are in foreclosure, especially! the ones where they have prepayment penalties. The more people we can keep in their houses the better it will be for us in the long run. Sure, we won't be able to save all of them and some of them probably really couldn't afford these homes. But there are a number who had their interest rates jacked up with these prepayment penalties that can only get out by selling their homes (in a down market). Not very good.
We should definitely force any exec that received a golden parachute and is part of a company that is in this bailout to return that money. They should not be benefiting while their company sinks. What incentive is that?
One bill from congress will not solve all of our economic problems. The bill will solve one problem ane one problem only. It will free up the credit system, so that the economic engine can get running again. Without it the economy will come to a grinding halt. The largest auto retailer in the country can no longer finance car loans. That type of problem, with all of it's ramifications, can only get worse until the problem is fixed.
Do you not think that keeping more people in their homes will help alleviate some of this problem? If we keep housing supply more stable, we will have less homes changing hands and requiring less credit to be needed. Yes, there is a credit crunch, but having a bunch of empty foreclosed homes helps no one, really, except maybe a few investors looking to buy homes on the cheap. And, I actually do invest in homes and this would be a great situation for me, but still... it's not good for the economy of the country.
What about the largest FRAUD in the world comitted and politicains, newspapers, television, and Huffinton Post are not talking about invstagations and prosecutions. Do all of these people have good friends that were involved in in this massive FRAUD?
1.CEOS placed pressure on bank pres. officers and loan officers to make loan they new ahead of time were NO good.
2.False Appraisals on houses were rampant and loan officers were told to make the loan by there superiors. Bank officers often were told to take the highest appraisals so they could have the loan on there books or pass it off to Freedie or Fannie.
3.Freddie Mac and Fannie Mae CEOS closed there eyes to ALL the bad paper even when they knew many could not afford the loans and that the loans would fail.
4. Those they gave out sub - prime loans new many clients never had the money to pay for them and did not have the assets to purchase the house they were buying.
If there are no Prosecutions and the criminals are allowed to walk away from the biggest financial crime of all times do not allow the bailout because others will do it in the future.
America will be for the super rich and rich to commit more frauds in the future
This is not America for the people and Huffinton Post can start by making a petition that starts of sayingWE The People and fill in the rest.
I really wish I could be more 'precise/right/correct or whatever..........but............;has anybody else read where in some of the 'failing banks' the executives "retired/quit" just this last spring with 'HUGE PACKAGES?".........I WISH I COULD FINE THAT INFO SO I COULD GET THE FULL STORY!!!
McCain's son bailed out of an investment company just before it went bankrupt. If you research that story, you may find more leads to other information.
Some financier on TV the other day said that they are expecting 600 financial institutions to fail in the next few months. If you watch the financial papers and see who is retireing or resigning, you may catch a clue there too.
That is true, they got LOTS of cash, millions. But that money is not coming back, so people need to stop focusing on that. Regulation is needed, but right now this is a crisis that needs to be solved in a way that limits what banks can do with the money, but which frees up credit. Why can't people get that?
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