I need to ask you to support an urgent secret business relationship with a
transfer of funds of great magnitude.
I am Ministry of the Treasury of the Republic of America. My country has had
crisis that has caused the need for large transfer of funds of 800 billion
dollars US. If you would assist me in this transfer, it would be most
profitable to you.
I am working with Mr. Phil Gram, lobbyist for UBS, who will be my
replacement as Ministry of the Treasury in January. As a Senator, you may
know him as the leader of the American banking deregulation movement in the
1990s. This transactin is 100% safe.
This is a matter of great urgency. We need a blank check. We need the funds
as quickly as possible. We cannot directly transfer these funds in the names
of our close friends because we are constantly under surveillance. My family
lawyer advised me that I should look for a reliable and trustworthy person
who will act as a next of kin so the funds can be transferred.
Please reply with all of your bank account, IRA and college fund account
numbers and those of your children and grandchildren to
wallstreetbailout@treasury.gov so that we may transfer your commission for
this transaction. After I receive that information, I will respond with
detailed information about safeguards that will be used to protect the
funds.
Yours Faithfully Minister of Treasury Paulson
Depends on whether you believe this'll be inflationary or deflationary.
If the government decides to inflate to pay off the bailout, then it sucks for savers and is awesome for mortgagees. But if their intervention isn't enough to halt the deflationary pressure of all these financial institutions failing, then it'll be catastrophic for debtors and good for savers.
People who held cash in the depression (and didn't see it wiped out by a bank run) gained close to 4x their money in about 2 years, which is as good or better than most other bubbles in history. That's relative to consumer prices: relative to asset prices (like stocks), it was nearly a 10x return.
umm have you actually seen the terms of the bailout that Paulson is trying to sell?
the bailout “shall be limited to $700,000,000,000 outstanding at any one time.” - the key words are 'at any one time' meaning this is a blank check for Paulson that he can just keep on drawing
It gets even better: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency"
so Paulson gets a blank check and we can't see what he's doing with our money - awesome! sign me up
to top it off with icing: "The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation... designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;"
so totalitarian socialism replaces free market enterprise? o yeah what happens to the dollar?
Who would you rather be in charge of the bailout? The President? Congress? ... Ill put my trust in Paulson, he and Bernake seem to be the only ones who have a clue as to what is going on and how to fix it.
Definitely, Paulson knows more about this than Congress. But Paulson has the perspective that comes with being a former Goldman Sachs CEO, so he might (knowingly or unknowingly) be biased towards helping out the banks too much.
lostinthewoods I don't know if what you posted is a joke or not, but I'm going to assume you're serious
Paulson may know more than Congress about finance but it doesn't take a genius to see that the proposed bailout is just a scam.
The Swedes got into similar trouble in the 90s and they solved it the right way (a bailout with a fair return for the government): "Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government.
That strategy held banks responsible and turned the government into an owner. When distressed assets were sold, the profits flowed to taxpayers, and the government was able to recoup more money later by selling its shares in the companies as well."
so you'd still rather put your trust into something without reading the fine details? Paulson isn't your uncle you know - not to mention both Democratic and (even) Republican senators are just pissed: http://www.politico.com/news/stories/0908/13789.html
If you're going to compare the US to another country you need to find a country of comparable economic size, complexity. I'll make it easy for you: there isn't one.
As for the bailout being a "scam", would seem to suggest that someone is flying off to Mexico with a bucket of cash. The reality seems to be that everyone is in for some pain. Companies have gone under, people have lost their jobs, and if the government doesnt act, its going to get worst.
that doesn't mean that what worked for Sweden wont work for the US. besides just in terms of common sense you don't just give someone money without being able to measure/keep track of anything along with a sizable return on investment
without any oversight whatsoever, a certain someone can technically go off to Mexico with 700 billion multiple times without anyone else knowing why or when
free markets self correct; if you're going to interfere with it since everyone has pain why not just bail out everyone then and not just Wall St? - hell even the auto makers need bailing out now
I looked in the mirror and saw someone who lives in a one-bedroom apartment, has modest and efficient '97 and '01 cars (one for his wife), saves about 10% of his income, and has no credit card debt.
We're all to blame for not paying attention to what our government and fellow citizens have been up to these past years that has gotten us into this mess.
There are most certainly those who have paid attention to this and recognized this mess was coming. The poster indicating he lived in the 1 bedroom apartment clearly recognized this as the difference between his situation and how those around him were acting was too obvious to ignore.
The majority rules in this democracy we live in and we can't have all policies the way we would like. However, we at least shouldn't distort the free market to this degree and spread the cost for this failure to properly judge risk.
Have you noticed that one of the main results of this saving of things which are "too big too fail" is a concentration of those big businesses into even bigger business, a greater proportion of which are now too big to fail? The rhetoric we had become used to hearing - that liquidity is subtle but very important (which it is) has changed to language of protection and we see policy responses to this. For example - the bans on non-naked shorting hits the liquidity of the options market (because it's harder to do things like hedging when you want to deal in options) and leads to further stagnation.
This is a generational phenomenon. The housing-market racket of the late '90s and early 2000s was a case of a large, dominant generation (Baby Boomers; b. 1943-58ish) enriching itself at the expense of a small, recessive generation (Gen X; 1958-80). It occurred during a period when the Baby Boomers were selling houses (that they inherited from parents, or that they were selling in order to downscale to smaller, more maintainable dwellings), when young families (Xers) were buying them, and when Millennials were (thankfully, from my perspective) still renting. All of these bailouts, in my opinion, are the same thing. Bush-style "conservatism" is clearly not future-oriented, and not very conservative either. Cutting taxes while starting a war? Come on. It's a bunch of obnoxious Baby Boomers with no foresight plundering the future.
26 comments
[ 6.9 ms ] story [ 90.2 ms ] threadGood surprise.
Dear American:
I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude. I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you. I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transactin is 100% safe. This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred. Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds. Yours Faithfully Minister of Treasury Paulson
If the government decides to inflate to pay off the bailout, then it sucks for savers and is awesome for mortgagees. But if their intervention isn't enough to halt the deflationary pressure of all these financial institutions failing, then it'll be catastrophic for debtors and good for savers.
People who held cash in the depression (and didn't see it wiped out by a bank run) gained close to 4x their money in about 2 years, which is as good or better than most other bubbles in history. That's relative to consumer prices: relative to asset prices (like stocks), it was nearly a 10x return.
the bailout “shall be limited to $700,000,000,000 outstanding at any one time.” - the key words are 'at any one time' meaning this is a blank check for Paulson that he can just keep on drawing
It gets even better: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency"
so Paulson gets a blank check and we can't see what he's doing with our money - awesome! sign me up
to top it off with icing: "The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation... designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;"
so totalitarian socialism replaces free market enterprise? o yeah what happens to the dollar?
Paulson may know more than Congress about finance but it doesn't take a genius to see that the proposed bailout is just a scam.
The Swedes got into similar trouble in the 90s and they solved it the right way (a bailout with a fair return for the government): "Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government.
That strategy held banks responsible and turned the government into an owner. When distressed assets were sold, the profits flowed to taxpayers, and the government was able to recoup more money later by selling its shares in the companies as well."
http://www.nytimes.com/2008/09/23/business/worldbusiness/23k...
so you'd still rather put your trust into something without reading the fine details? Paulson isn't your uncle you know - not to mention both Democratic and (even) Republican senators are just pissed: http://www.politico.com/news/stories/0908/13789.html
As for the bailout being a "scam", would seem to suggest that someone is flying off to Mexico with a bucket of cash. The reality seems to be that everyone is in for some pain. Companies have gone under, people have lost their jobs, and if the government doesnt act, its going to get worst.
without any oversight whatsoever, a certain someone can technically go off to Mexico with 700 billion multiple times without anyone else knowing why or when
free markets self correct; if you're going to interfere with it since everyone has pain why not just bail out everyone then and not just Wall St? - hell even the auto makers need bailing out now
So, yeah, I'm looking for who to blame.
The majority rules in this democracy we live in and we can't have all policies the way we would like. However, we at least shouldn't distort the free market to this degree and spread the cost for this failure to properly judge risk.