$700 Billion Bailout

[mr_genius]

The only other way is to change the accounting system. You can post all of the names you like, but without a banking system, we don't exist.

 

i'm fine with more transparency in accounting.

 

not I, or the economists i listed, want to get rid of the banking system. the fact is that the structure of the bailout is not that strong. what parts of the concerns listed do you disagree with?

Edited October 21, 2008 by mr_genius

[kapkomet]

i do like the increase in the FDICs deposit insurance cap.

In reality, it (FDIC cap raising) doesn't mean a damn thing. It's all bulls*** to make it look like they did something.

 

[Balta1701]

In reality, it (FDIC cap raising) doesn't mean a damn thing. It's all bulls*** to make it look like they did something.

Well, it would if the FDIC hadn't already run out of money.

[bmags]

i do like the increase in the FDICs deposit insurance cap.

 

I like the fact that it allowed it to do the stock purchase that the plan is now as opposed to only letting us buy their s***ty assets.

[southsider2k5]

i'm fine with more transparency in accounting.

 

not I, or the economists i listed, want to get rid of the banking system. the fact is that the structure of the bailout is not that strong. what parts of the concerns listed do you disagree with?

 

Well the first thing I have a problem with is that it is not a fact, it is some people's opinion.

 

Secondly they offer zero alternative to anything. As a matter of a face their "proposal" reminds me of a term I learned in marketing101 all of those years ago, "glittering generalities". There is no substance there at all. Nothing they say would actually fix the existing problem. The problem is that there is no capital to be lent in the system. Lending is like blood to the American economy, without it business shrivels up and dies. Its cute and cool to say "why should we bailout bad business, let em fail", but silly me I happen to like my job, and dislike 25% national unemployment. If you don't believe me, track down some real life corporate executives and ask them how important capital is to their business sector and model.

 

The bailout isn't perfect, but it is ignoranance of the banking systems functionality within modern corporate America to think we could let the biggest banks in the country fail without suffering huge repercussions. Herbert Hoover tried this same thing eighty years ago and how did that work out? I prefer to learn from my history instead of repeating it.

[mr_genius]

Well the first thing I have a problem with is that it is not a fact, it is some people's opinion.

 

Secondly they offer zero alternative to anything. As a matter of a face their "proposal" reminds me of a term I learned in marketing101 all of those years ago, "glittering generalities". There is no substance there at all. Nothing they say would actually fix the existing problem. The problem is that there is no capital to be lent in the system. Lending is like blood to the American economy, without it business shrivels up and dies. Its cute and cool to say "why should we bailout bad business, let em fail", but silly me I happen to like my job, and dislike 25% national unemployment. If you don't believe me, track down some real life corporate executives and ask them how important capital is to their business sector and model.

 

The bailout isn't perfect, but it is ignoranance of the banking systems functionality within modern corporate America to think we could let the biggest banks in the country fail without suffering huge repercussions. Herbert Hoover tried this same thing eighty years ago and how did that work out? I prefer to learn from my history instead of repeating it.

 

Again you assume that the only solution to avoid another great depression was a bad bailout bill, which was rushed and short sighted. Grats on taking marketing 101, but I and these economists are not ignorant on these matters. The concerns listed were direct and accurate. No one cares about any cutesy bulls***, the suggestions for improvements were there; but they aren't going to put to together a 100 page proposal that will never get read or enacted. They wouldn't add a acceptable amount of pork ear marks for congressional approval. The purpose was to send out a compact letter of greviences and suggestions. If done correctly, the plan could have been more of a cash injection into the credit markets, not less.

 

An alternative to merely dishing out 700 billion would be to address core issues with the banking system. Right now we get the worst of both worlds. A trillion dollars is quite a bit of money to dump into a failed system, and learnign from the past isn't happening. If the government is explicitly funding these banks, there needs to be much more oversight. Actions should have been taken not only to inject cash flow into the lending system but to ensure that this was done wisely. A more thought out, targeted use of the money would not have caused a great depression. There needs to be much more transparency in entities that are insured by the taxpayers and will get bailed out upon failure. Demands that banks give out risky loans needs to end. There needs to be higher levels of accountability upon disasters such as this, and there needs to be signifigant actions taken, besides merely bailing out corporations, to help ensure a solid future within the banking industry.

Edited October 21, 2008 by mr_genius

[mr_genius]

Well, it would if the FDIC hadn't already run out of money.

 

since when did 'not have any money' stop the government from anything? there is a 10 trillion dollar debt and the US wouldn't blink at raising it to 20 trillion in the next 10 years. the FDIC will be able to back up these bank deposits.

 

 

Edited October 21, 2008 by mr_genius

[mr_genius]

Well, there's already talk of another stimulus check which will be sent out after the election . Schumer predicted a $600 check to be sent out to individuals.

 

thoughts?

[NorthSideSox72]

Well, there's already talk of another stimulus check which will be sent out after the election . Schumer predicted a $600 check to be sent out to individuals.

 

thoughts?

These stimulus checks are silly. Won't help in a way that needs to be helped.

 

I've heard talk of funding a lot of works projects, like roads/rails/bridges type stuff - its a nice marriage between things the country needs (infrastructure work and jobs) and a more sustainable solution than a $600 check. I'd rather see that done.

 

Alternately, we can do some serious funding for alternative energy infrastructure and technology projects, which could help trigger long run jobs and growth as well as help our energy needs (and reduce pollution and health care costs, and help the environment, and allow us to sell technology globally, etc.).

 

[mr_genius]

These stimulus checks are silly. Won't help in a way that needs to be helped.

 

I've heard talk of funding a lot of works projects, like roads/rails/bridges type stuff - its a nice marriage between things the country needs (infrastructure work and jobs) and a more sustainable solution than a $600 check. I'd rather see that done.

 

Alternately, we can do some serious funding for alternative energy infrastructure and technology projects, which could help trigger long run jobs and growth as well as help our energy needs (and reduce pollution and health care costs, and help the environment, and allow us to sell technology globally, etc.).

 

Infrastructure and technology investments would be much better than the cash giveaway. I think the Dems are planning on both, they need to ditch the stimulus check portion.

[lostfan]

Well, there's already talk of another stimulus check which will be sent out after the election . Schumer predicted a $600 check to be sent out to individuals.

 

thoughts?

Good thing we had that one a few months ago to keep our economy from falling apart. Maybe the next one will too.

[Balta1701]

Infrastructure and technology investments would be much better than the cash giveaway. I think the Dems are planning on both, they need to ditch the stimulus check portion.

OMFG.

 

You and I totally agree.

 

Like 100%.

 

I couldn't have said that better myself.

 

I'm going to go be sick now

[NorthSideSox72]

OMFG.

 

You and I totally agree.

 

Like 100%.

 

I couldn't have said that better myself.

 

I'm going to go be sick now

And because liberals, conservatives and moderates all think its a bad idea... guess what Congress will do?

 

[Balta1701]

And because liberals, conservatives and moderates all think its a bad idea... guess what Congress will do?

At least I'll get more money to go blow in Vegas.

[kapkomet]

And because liberals, conservatives and moderates all think its a bad idea... guess what Congress will do?

Exactly. They are floating a lot of bulls*** to pander for votes. That's for damn sure.

 

[lostfan]

At least I'll get more money to go blow in Vegas.

I was actually going to use it on hookers and coke. Anyone got any better ideas?

[mr_genius]

OMFG.

 

You and I totally agree.

 

Like 100%.

 

I couldn't have said that better myself.

 

I'm going to go be sick now

 

I changed my mind. I am now supporting the free money giveaway so I can buy coke and hookers.

[southsider2k5]

http://online.wsj.com/article/SB122455061443852529.html

 

Obama Talks Nonsense on Tax Cuts

Revenues will inevitably be diverted from Social Security.

 

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By WILLIAM MCGURN

 

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Now we know: 95% of Americans will get a "tax cut" under Barack Obama after all. Those on the receiving end of a check will include the estimated 44% of Americans who will owe no federal income taxes under his plan.

[Main Street] AP

 

In most parts of America, getting money back on taxes you haven't paid sounds a lot like welfare. Ah, say the Obama people, you forget: Even those who pay no income taxes pay payroll taxes for Social Security. Under the Obama plan, they say, these Americans would get an income tax credit up to $500 based on what they are paying into Social Security.

 

Just two little questions: If people are going to get a tax refund based on what they pay into Social Security, then we're not really talking about income tax relief, are we? And if what we're really talking about is payroll tax relief, doesn't that mean billions of dollars in lost revenue for a Social Security trust fund that is already badly underfinanced?

 

Austan Goolsbee, the University of Chicago economic professor who serves as one of Sen. Obama's top advisers, discussed these issues during a recent appearance on Fox News. There he stated that the answer to the first question is that these Americans are getting an income tax rebate. And the answer to the second is that the money would not actually come out of Social Security.

 

"You can't just cut the payroll tax because that's what funds Social Security," Mr. Goolsbee told Fox's Shepard Smith. "So if you tried to do that, you would undermine the Social Security Trust Fund."

 

Now, if you have been following this so far, you have learned that people who pay no income tax will get an income tax refund. You have also learned that this check will represent relief for the payroll taxes these people do pay. And you have been assured that this rebate check won't actually come out of payroll taxes, lest we harm Social Security.

 

You have to admire the audacity. With one touch of the Obama magic, what otherwise would be described as taking money from Peter to pay Paul is now transformed into Paul's tax relief. Where a tax cut for payroll taxes paid will not in fact come from payroll taxes. And where all these plans come together under the rhetorical umbrella of "Making Work Pay."

 

Not everyone is persuaded. Andrew Biggs is a scholar at the American Enterprise Institute and a former Social Security Administration official who has written a great deal about Mr. Obama's plans on his blog (AndrewGBiggs.blogspot.com). He notes that to understand the unintended consequences, it helps to remember that while people at the bottom pay a higher percentage of their income in payroll taxes, they are accruing benefits in excess of what they pay in.

 

"It's interesting that Mr. Obama calls his plan 'Making Work Pay,'" says Mr. Biggs, "because the incentives are just the opposite. By expanding benefits for people whose benefits exceed their taxes, you're increasing their disincentive for work. And you're doing the same at the top of the income scale, where you are raising their taxes so you can distribute the revenue to others."

 

Even more interesting is what Mr. Obama's "tax cuts" do to Social Security financing. As Mr. Biggs notes, had Mr. Obama proposed to pay for payroll tax relief out of, well, payroll taxes, his plan would never have a chance in Congress. Most members would look at a plan that defunded a trust fund that seniors are counting on for their retirement as political suicide.

 

And that leads us to the heart of this problem. If the government is going to give tax cuts to 44% of American based on their Social Security taxes -- without actually refunding to them the money they are paying into Social Security -- Mr. Obama will have to get the funds elsewhere. And this is where "general revenues" turns out to be a more agreeable way of saying "Other People's Money."

 

When asked about his priorities during the second presidential debate, Mr. Obama said that reform of programs like Social Security would have to go on the back burner for two years or so. "We're not going to solve Social Security and Medicare unless we understand the rest of our tax policies," he said.

 

The senator is right. But you have to read the fine print of his tax cuts to know why.

 

Write to [email protected]

[southsider2k5]

Again you assume that the only solution to avoid another great depression was a bad bailout bill, which was rushed and short sighted. Grats on taking marketing 101, but I and these economists are not ignorant on these matters. The concerns listed were direct and accurate. No one cares about any cutesy bulls***, the suggestions for improvements were there; but they aren't going to put to together a 100 page proposal that will never get read or enacted. They wouldn't add a acceptable amount of pork ear marks for congressional approval. The purpose was to send out a compact letter of greviences and suggestions. If done correctly, the plan could have been more of a cash injection into the credit markets, not less.

 

An alternative to merely dishing out 700 billion would be to address core issues with the banking system. Right now we get the worst of both worlds. A trillion dollars is quite a bit of money to dump into a failed system, and learnign from the past isn't happening. If the government is explicitly funding these banks, there needs to be much more oversight. Actions should have been taken not only to inject cash flow into the lending system but to ensure that this was done wisely. A more thought out, targeted use of the money would not have caused a great depression. There needs to be much more transparency in entities that are insured by the taxpayers and will get bailed out upon failure. Demands that banks give out risky loans needs to end. There needs to be higher levels of accountability upon disasters such as this, and there needs to be signifigant actions taken, besides merely bailing out corporations, to help ensure a solid future within the banking industry.

 

They missed by far the most important aspect. Actually having banks around. Nothing they said actually solved the biggest immediate problem in the system which is a lack of liquidity. Everything they criticized was the things that actually put capital back into the system that had seized up and wasn't moving. All of the cutesy stuff about targeted injections doesn't work if the target is dead. Its like putting a tank full of gasoline in your car when you have no oil in it. The damn thing isn't going anywhere anyway. All of the stuff you are talking about is secondary to saving the whole system. Banks were already failing at an alarming rate. The longer you waited playing around with transparency and demands, the more capital that disappears out of the system forever. Ask Lehman Brothers and FreddieMac what the delays did for them.

 

Besides the only way to really fix the system is to completely blow it up, and I didn't see that in there either. Get the feds out of the mortgage industry all together. They had no business being the implicit guarenteer of housing for the people who couldn't afford it. The government itself is the one who really pushed subprime lending into the mainstream. Big banking just picked it up and ran with it from there. Not a word in that document said anything about that. If they government wanted to really fix the system they would trustbust Freddie and Fannie into a million little pieces, so that if one had problems, the whole system wouldn't be taken down by it. It also wouldn't allow the other banks to be able to know that they could sell these s***ty loans back to the feds, and it would make them actually take some responsibility for their loans up front, instead of when it was too late. I didn't see anything about that either.

[Balta1701]

Ugly. God I hate this regulatory system. This is just a joke right? The Washington Post was bought out by the Onion yesterday?

U.S. banks getting more than $163 billion from the Treasury Department for new lending are on pace to pay more than half of that sum to their shareholders, with government permission, over the next three years.

 

The government said it was giving banks more money so they could make more loans. Dollars paid to shareholders don't serve that purpose, but Treasury officials say that suspending quarterly dividend payments would have deterred banks from participating in the voluntary program.

 

Critics, including economists and members of Congress, question why banks should get government money if they already have enough money to pay dividends -- or conversely, why banks that need government money are still spending so much on dividends.

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"The whole purpose of the program is to increase lending and inject capital into Main Street. If the money is used for dividends, it defeats the purpose of the program," said Sen. Charles E. Schumer (D-N.Y.), who has called for the government to require a suspension of dividend payments.

 

The Treasury plans to invest up to $250 billion in a wide swath of U.S. banks in return for ownership stakes, which the government will relinquish when it is repaid.

 

Among other restrictions, participating institutions cannot increase dividend payments without government permission. They also are barred from repurchasing stock, which increases the value of outstanding shares.

 

The 33 banks signed up so far plan to pay shareholders about $7 billion this quarter. Companies generally try to pay consistent dividends and, at the present pace, those dividends will consume 52 percent of the Treasury's investment over the initial three-year term.

 

"The terms of our capital purchase program were set to encourage participation by a broad array of financial institutions so they strengthen their financial positions," Treasury spokeswoman Michele Davis said.

 

The Treasury's approach contrasts with decisions by foreign governments, including Britain and Germany, to require banks that accept public investments to suspend dividend payments until the government is repaid. The U.S. government similarly required Chrysler to suspend its dividend payments as a condition of the government's 1979 bailout.

[Texsox]

Sounds like the major campaign donors are getting taken care of.

[Balta1701]

Sounds like the major campaign donors are getting taken care of.

I think I gave the "Bank robber" reference somewhere early in this thread. It's like a couple of guys have broken in to a bank and have been filling up sacks of money, and off in the distance they hear a police siren. "Quick, grab what you can before the cops get here!"

[mr_genius]

They missed by far the most important aspect. Actually having banks around. Nothing they said actually solved the biggest immediate problem in the system which is a lack of liquidity. Everything they criticized was the things that actually put capital back into the system that had seized up and wasn't moving. All of the cutesy stuff about targeted injections doesn't work if the target is dead. Its like putting a tank full of gasoline in your car when you have no oil in it. The damn thing isn't going anywhere anyway. All of the stuff you are talking about is secondary to saving the whole system. Banks were already failing at an alarming rate. The longer you waited playing around with transparency and demands, the more capital that disappears out of the system forever. Ask Lehman Brothers and FreddieMac what the delays did for them.

 

Again, you are under the false assumption that not giving them a check with free reign will destroy all banks.

[mr_genius]

Ugly. God I hate this regulatory system. This is just a joke right? The Washington Post was bought out by the Onion yesterday?

 

I knew this was going to happen, and honestly if you think that is bad you are going to be super pissed when you see where most of the bailout money goes.

Edited October 30, 2008 by mr_genius

[Texsox]

I knew this was going to happen, and honestly if you think that is bad you are going to be super pissed when you see where most of the bailout money goes.

 

Damn, and we also need to cut their taxes