Monday May 28, 2012

Bush team, Congress negotiate $700 bil bailout

World ( 33 )

The requested article has expired, and is no longer available. Any related articles, and user comments are shown below.

Back to top

Order by Time Order by Popularity

33 Comments

Login to comment

  • 0

    Badsey

    the road to 1 Trillion:

    Once congress adds their pork they should hit 1 trillion easily or are they looking for a buyout also?

  • 0

    Sarge

    I'm sure they can find another $300 billion to make it an even trillion.

  • 0

    Betzee

    GWB, who spent months mindlessly assuring the public "the fundamentals of our economy are sound," something the near meltdown of Wall Street demonstrated was not the case, now wants to “work with Congress to get a bill done quickly.”

    Having averted disaster which required fast action, the next stage should be appropriately deliberative. One question (among many) is how will the purchase price of these bad assets on bank books be determined? If Uncle Sam, or specifically the Treasury Department, gets the price right, the upfront outlay could be recouped at the later resale date (after the real estate market recovers). On the other hand, if it overpays, the taxpayer will have to absorb the difference.

  • 0

    Taka313

    Betzee, The taxpayer will absorb the difference. I am pretty confident on that one.

    Taka

  • 0

    Sarge

    "the fundamentals of our economy are sound," something the near meltdown of Wall Street demonstrated was not the case"

    Pffft! Wall Street could melt down like the Wicked Witch of the West, and our factories will still turn out the aircraft that the rest of the world wants to buy, and Hollywood will still churn out the movies that the rest of the world wants to see.

  • 0

    Betzee

    Taka,

    Paul Krugman noted in his column early last week:

    The Swedish government laid out 4 percent of G.D.P., which in our case would be a cool $600 billion — although the final burden to Swedish taxpayers was much less, because the government was eventually able to sell off the assets it had acquired, in some cases at a handsome profit.

    But it’s no use whining (sorry, Senator Gramm) about the prospect of a financial rescue plan. Today’s U.S. political system isn’t going to follow Andrew Mellon’s infamous advice to Herbert Hoover: “Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.” The big buyout is coming; the only question is whether it will be done right.

    Though I'm sure (or at least I hope) people are studying the Swedish example, (how humiliating for free-marketeers!), I personally don't have much faith this is going to be anything but a total write-off which the US taxpayer is going to have to absorb in full. Nonetheless, we will have to wait and see.

  • 0

    Betzee

    Pffft! Wall Street could melt down like the Wicked Witch of the West, and our factories will still turn out the aircraft that the rest of the world wants to buy,

    Hello??? Are you living in the 21st century?

    About our only manufactured product sold overseas is commercial aircraft. And who buys 'em? The Chinese. If Wall Street shut down, there would be no way for their check to Boeing to clear. Moreover, Chinese state-owned banks purchased billions of dollars of FannieMae/FreddieMac bonds. This made it impossible to let these mortgage giants fail without incurring disastrous international repercussions. How many treasury bonds do you think the Chinese would purchase after that happened? Then Uncle Sam would have to close down as well.

    If you really have an interest in enlightening yourself, go to the www site Angry Bear which is maintained by someone with a background in finance.

    http://angrybear.blogspot.com/2008/09/roubinis-not-wrong-but.html

  • 0

    CavemanLawyer

    If Wall Street shut down, there would be no way for their check to Boeing to clear.

    I am no finacial whiz kid, but I do not see how Mac And Mae will take Wall Street down with them. I say, let them go, and erase the debt. People keep their homes, and the loan and credit industry get the message to smarten up and accept that they have to work too, not just sit back and try to pass the buck at a profit. They did not learn from Enron, so this is lesson number 2.

    The whole system needs re-tooled, not just credit and loan. From relaxation of the building codes, to general and automatic protection of people's homes from all creditors including the government, to keeping land prices reasonable. Also banks need to made to be more user-friendly and lose the ability to toss their loans around like a hot potato.

    Some public service announcements reminding the average American to live within his means would also be nice, but the first step is to make that possible as I suggest in the above paragraph.

    But the last thing any of our presidential hopefuls is going to tell any of us is to stop being greedy SOBs, and that goes out to rich and poor alike.

    --Cirroc

  • 0

    Betzee

    I am no finacial whiz kid, but I do not see how Mac And Mae will take Wall Street down with them.

    Not by themselves, no, but the Chinese investors would expect Uncle Sam to make good on its obligations. If we didn't, we could kiss future Chinese purchases of both bonds and goods good-bye. (They can get commercial aircraft from Airbus, after all.) Plus, if major entities fail it's hard to maintain investor confidence in the system.

    There was one bank which was allowed to get belly up, Lehman Brothers. Why was that allowed to fail while Bear and Stearns was bailed out? I learned the probable answer from Angry Bear:

    Had Bear and Stearns been allowed to go under, "about 30 percent of the hedge funds in the country would not have been able to execute virtually any transaction for the following thirty days. Not a payment. Not a redemption. Not a trade on a listed exchange. Not a receipt. Not a de-leveraging. Not a swap payment, not a CDS payment, not fulfilling an option exercised against them."

    Lehman Brothers, in short, had no clearing arm in contrast to Bear and Stearns.

  • 0

    CavemanLawyer

    Democrats also are considering attaching additional middle-class assistance to the legislation despite a request from Bush to avoid adding controversial items that could delay action.

    In other words, Democrats are working for you while Bush only wants to save the rich.

    I predict a certain someone is going to come along and tell us that saving the rich is the same thing as saving the poor. Let the rich keep their multi-million dollar homes while you live on the street. They will give a job again eventually. And all will be well. Yeahright!

    Personally, I think its time for the rich to downsize. Maybe the middle-class too, but nobody should be on the street. Remember, its the Dems who are trying to save you, average American. Remember that in November.

    --Cirroc

  • 0

    CavemanLawyer

    but the Chinese investors would expect Uncle Sam to make good on its obligations.

    The Chinese are also welcome to invest more carefully. They took the same risks as everybody else. But I predict they will be back.

    Had Bear and Stearns been allowed to go under, "about 30 percent of the hedge funds in the country would not have been able to execute virtually any transaction for the following thirty days.

    Like I say, I am no finacial whiz kid. Sounds like some people would be locked into their investments. Maybe even lose them. If people thought what they were doing was not a gamble, I think this is a nice time for a hard lesson.

    Confidence is great. But over-confidence will kill us worse.

    --Cirroc

  • 0

    Betzee

    The Chinese are also welcome to invest more carefully. They took the same risks as everybody else.

    I found this on a www site which is interesting:

    The top five foreign holders of Freddie and Fannie long-term debt are China, Japan, the Cayman Islands, Luxembourg, and Belgium. In total foreign investors hold over $1.3 trillion in these agency bonds, according to the U.S. Treasury's most recent "Report on Foreign Portfolio Holdings of U.S. Securities."

    FreedomWorks President Matt Kibbe commented, "The prospectus for every GSE bond clearly states that it is not backed by the United States government. That's why investors holding agency bonds already receive a significant risk premium over Treasuries."

    I haven't seen the stock prospectus but I assume the information is accurate. While international investors may have been receiving higher "dividends" owing to the greater risk, the fact that we are so reliant on foreigners is a reflection of the low American savings rate. They may or may not be back in the event of a melt-down. But we can't function without them and maintain our standard of living.

  • 0

    CavemanLawyer

    But we can't function without them and maintain our standard of living.

    Time for everyone to stop pretending to be rich, and for the truly rich to lose some fat. Time for everyone to start living in the real world again, and I don't see a problem with that except some fantasy withdrawal symptoms.

    I think if more people were living in the real world, there is no way we would have Bush in the White House 8 years and no way we would have troops in Iraq and all the debt that came with it. We certainly would not have this crisis either. If this will wake people up to the real world and get them to start doing the things that are important, and analyzing what is important, then I welcome it. The past 8 years have been pretty stupid for America. This kick in the posterior I welcome so long as we can keep families in their homes despite the pigs in finance howling for cash.

    --Cirroc.

  • 0

    SwiftBoatVet

    cavemanlawyer- why should i stop being rich, when i ahve worked almost everyday since leaving school. This crisis is caused by rich shareholders (mostly Democrats) who cream off hard working folks cash into their own pockets.

    I shall maintain my modest standard of living, and avoid get rich uick property buying or share buying that many were hoodwinked into by greedy bankers.

  • 0

    SuperLib

    (how humiliating for free-marketeers!)

    Agreed, Betzee. If only the US had a market like Cuba's we wouldn't have to worry about $700 billion dollar losses because the entire market itself would be worth less than $700 billion.

    Take THAT, capitalists!

  • 0

    CavemanLawyer

    why should i stop being rich, when i ahve worked almost everyday since leaving school.

    Because the need of others to have a home outweighs your need to sell their property to recoup your losses on a stupid investment?

    I shall maintain my modest standard of living

    I thought you were the richest in your neighborhood?

    and avoid get rich uick property buying or share buying that many were hoodwinked into by greedy bankers.

    Well, if you have already been doing that then what are you worried about? I do not mind people getting rich per se, I only have a problem when there are no limits and people get squeezed dry. The integrity of no man's wealth outweighs the need of all men to have the basics of life.

    This crisis is caused by rich shareholders (mostly Democrats) who cream off hard working folks cash into their own pockets.

    Groundless and ridiculous statements like this are not going to earn Republicans any love. In fact, you make people like me think you all must a bunch of nutcases. Do yourself and your party a favor and start speaking when you have proof and holding your tongue when its your scizophrenic side is trying to talk.

    --Cirroc

  • 0

    SwiftBoatVet

    Caveman lawyer- do not insult me, you make youself look a fool and envious of my status. I am the richest, because of my hard workung nature. I do not live an extravegant life. i drive a small eco friendly car, i do not buy designer clothing and i vacation infrequently.

    I have never bought shares, my religous beliefs equate it with gambling, and only a few will benefit while the majority suffer.

    We are being bailed out because of corporate greed, people without morals mean myself and future generations will pay because of their greed. The evil swines should live a decent moral life and be humble.

  • 0

    CavemanLawyer

    Agreed, Betzee. If only the US had a market like Cuba's we wouldn't have to worry about $700 billion dollar losses because the entire market itself would be worth less than $700 billion.

    Take THAT, capitalists!

    Having an issue with free marketeers does not mean one supports Cuban style reform in the U.S. But if you think a new system is going to make Cuba a rich nation, I think you have been toking off the capitalist hookah a little too long.

    The system and hard work has helped America become rich. But if not for the resources that Cuba never had, we never would have gotten where we are today, not in a thousand years.

    But if you would like to tell us all about Cuba's "Golden Age" under a different system, then be my guest. Just remember that it does not count if the rich got rich by driving the poor further down than they already were. It also does not count if slaves were used.

    --Cirroc

  • 0

    SwiftBoatVet

    I would not buy shares in anything whatever. I have loaned people money to start up businesses where banks refused to lend. i do not consider this to be gambling, though i suppose there was a risk to me. However it was a risk i could easily afford,and nobody would have suffered if the business plan failed.

    I run a business, but it is no Microsoft. If i lived extravagently, i would not have money, and i would have to force my staff to work harder for less wages, and that is morally wrong, though these days sadly it is an accepted practice.

  • 0

    taniwha

    Well spoke Caveman.

    The only way people across the globe can live in relative peace and security is to respect the fact we all of equal rights to the resources of this planet. Even Cuba must eventually throw out their nationalist ideology.

    The answer to prosperity is peace and the path to both is a united planet that puts human beings before profit. Nation states and Capitalism are obstacles to both goals. Now that the US Congress has bailed out Wall Street the world has evidence enough that the free market ideology was nothing but false ideology. Every painful tweak along the way led us to this, recession across the globe, and depression around the corner.

    Cuba now is doing nothing less now that moving toward a 'local form of Capitalism' as did China. Its too late for that at this point. Cuba as a nation would suffer the same problems no matter which of the two 'C's it follows. Yet it has so much it can offer the rest of the world. All we need is a system that actually does work to all of our benefit.

  • 0

    CavemanLawyer

    SwiftBoatVet,

    In many ways you are earning my respect with your policies. But you have to accept that the superwealthy, the one percent of Americans that hold 38 percent of all the wealth , the five percent that own 59 percent of the wealth, the twenty percent that own 80 percent of all the wealth, are not like you.

    The top 1 percent of families hold half of all non-home wealth.

    http://multinationalmonitor.org/mm2003/03may/may03interviewswolff.html

    The situation is not acceptable. And it is only getting worse. The link is from 2003. Obviously more of the rich now technically own more housing. That is how we got into this. I think we would be fine if more of the super wealthy and even moderately wealthy had your attitude and policy.

    --Cirroc

  • 0

    CavemanLawyer

    Well spoke Caveman.

    Thank you.

    Now that the US Congress has bailed out Wall Street the world has evidence enough that the free market ideology was nothing but false ideology.

    I think that is saying too much. I think it is safer to say that no one system or ideology is perfect and combinations must be used. In general, free market is pretty good, but obviously some industries need more over-sight. Some might need some temporary support rather than a complete bail out though. Some things should be allowed to collapse, but just delay it.

    Be suspicious of anyone claiming a one pure way. If there was such a thing, we would have found it by now.

    --Cirroc

  • 0

    taniwha

    Be suspicious of anyone claiming a one pure way

    True, well, almost, because it isn't necessarily so. Capitalism as an economic and political ideology is nothing more than an article of faith, like religion. A pure concept/way that one can continue to follow blindly or choose to move on from. It hasn't worked. It has failed to deliver its promise, enunciated by world leaders for more than a century, i.e. an end to poverty, an end to war.

    The Capitalist system is all encompassing to the extent that alternatives are either ridiculed or feared, and that is no accident. At this point in time the economic and political monolith is busily eating itself. The result is undemocratic authoritarian rule, by the corporations through the government. An alternative is International Socialism. We are already a step toward that state now. Globalism has united the world for better or for worse. If we stick with Capitalism and the Nation state we will find ourselves stepping back into the dark ages. As resources disappear desperation sets in amongst the ruling elites in every nation state. This will lead to war.

    The process is well advanced. Right now, in both economic and political terms is precisely where the world was just before the Great Depression and World War 2.

  • 0

    DXXJP

    Obama said. “And we must also ensure that the solution we design doesn’t reward particular companies, or irresponsible borrowers or lenders, or CEOs, some of whom helped cause this mess.

    A little late for that. Lets see Dubya and Co has borrowed how much to fund a invasion, that we all have to pay back, on top of that how much has been spent on oh lets say haliburton and the lot, not to mention the C&C, and his cronies that helped cause the mess.

    So here we are bailing out the stock market and banks but still the tax payer wont get alot of help with their own mortgage. But hey as long as employment keeps dropping like a rock and the US Company's keep shuffling of the domestic work to CHINA ( which is where we are borrowing the money to begin with) this bail out will just be another cat chasing its tail.

  • 0

    TonyUS

    I believe all have a grasp on causes. As I read these posts arguing the points of greed, profits plus large corporate interests trumping government policies.

    All together has brought us to the point of today’s situation.. cost of living, soaring energy costs and greed, no controls on these large corporations that has no limit on profits and no competition to balance out the unlimited profits these large corporations are generating when the sky is the limit because they have no competition that can put the brakes on margin of profit. Isn't this describing a monopoly of sort. Sure free trade and open markets, but to compete, all have to move overseas with low labor costs, no environmental agencies to comply to and over to countries where human rights have no bearing.

    All these bailouts are of government policies that refuse to deal with the main problem behind all of this and that is cost of living. People are losing everything as we speak because the cost of living has increased beyond many people's means. What they could afford say 5 years ago is not what they can afford today. Five years ago their mortgages and borrowing was not a risk because of their financial situation at that time, but five years later with all the increased expenses mainly due to the triple rise in cost of energy has affected everything as a consumer and has brought so many to that breaking point where they just can not make ends meet like they were able to five years ago when applying for loans and mortgages. Companies are able to go overseas and produce products at dirt rate expense and at the same time those jobs that were here are disappearing and just adds to the numbers. I see many factors that has created what we are experiencing now but as for the main one .. I see it as being that of a major imbalance in trade policies and , but other major problems the government has co-towed to large corporations that has done nothing for us as the government keeps giving them incentives trying to convince everyone that they are our saviors when all they have done is pocketed their profits and also added to their profits the incentives the government has provided them with and then move the jobs overseas to beat all..

    Maybe my view absurd to some but I am so sick of what has been going on.. looking at China with growth rates of 10, 11, 12 percent, ours come up to 1.9 percent and looking at recession or in recession as China is trying to cool down their economy where all the manufacturing there is allowed to feed us products at a no ended pace. Now who is the winner and who are the losers? We have countries rising above us because of large economic growths from the price we must pay for oil, gas and other resources connected to energy and these that are growing in wealth are now very openly showing the snake like heads in the world and bringing us more and more problems to deal with, and other countries that are not yet a threat , such as China that supports others that are our problem that will veto UN resolutions to put halts to those that are becoming grave threats to us and our allies around the word. What has our open policies gained us? Nothing but, where we are now. Has it gained us friendship and respect. I do not see anything in that regard. I do see them taking it all in with open arms though and at the same time building military power directed directly at our own so they can knock us our of our dominating positions we have held since WWII such as in Asia with China building its military to the max. Russia and Venezuela joint military ventures along with Russia aggressive stance on Antarctica and military bomber flights they resumed last year. All of these issues are related and not one is the single element or cause but when all have combined, we have great problems all due to policies and must say irresponsible policies and not just by one single party in Washington..

  • 0

    Nippon5

    Be suspicious of anyone claiming a one pure way. If there was such a thing, we would have found it by now.

    --Cirroc

    I think this statement should apply to every decision made in politics.. And the problem is that every politician says they have the answer and the other side is wrong... So why do so many blindly follow on political person or group and not find a medium between the groups???

  • 0

    taniwha

    Tony

    • you seem to have sooo many enemies out there. Many of your points are very well made in the beginning, but you are overlooking a number or realities.

    China is carrying the West right now. It has been doing that for quite a while. Its been the sweat shop for the rich industrialised countries like the US, supplying US industry with a huge profit not through increased markets for American goods made in China, but through cheap labour. What do you think is going to happen when Chinese workers demand parity with their counterparts abroad? Not only Chinese but also Mexicans working in US factories that shifted to Mexico.

    Well that is happening now. US manufacturing companies have been making less and less profit these past few years.

    Another negative result of globalisation has been the hollowing out of production industry within the USA. All those factories abroad mean Americans have lost jobs. Unemployed have no money to pay mortagages, part of the reason the sub-primes finally undermined US and other banks across the globe. Look at major cities like Detroit once a production powerhouse, now virtually an industrial wasteland.

    For years now the US government has de-regulated the financial industry, encouraging banks to make loans to lenders who had no hope of paying them off. All because debt packages were used as assets to leverage more profit. Endless credit fueled by endless greed, allowed by all but entirely de-regulated 'free' market.

    And why wouldn't China build up its military. It now has the cash. It certainly has the incentive. Remember it was the good ol USA that first built its military into the most powerful the world has ever seen, then used it to decimate Iraq, a country already rendered defenseless by years of economic sanctions. 3 million Iraqi refugees, more than 1 million Iraqi citizens murdered, and all for what? For democracy, or to control the world's 2nd largest reservoir of oil? It was the USA that dismantled the Geneva Conventions and declared any country with the might was able to militarily attack another if it felt due justification.

    Of course China would want to build up its military, so would Russia, so would Japan (encouraged by the US), and of course so would Iran. All of these countries either have oil/gas reserves to keep secure or desire to have access to them. This is the time of peak oil.

    You know you might want to keep some perspective here. What this world needs to do dismantle a system that justifies profit above human life. American have as little need of a world like that as the rest of us.

  • 0

    Taka313

    The good news is Fannie May and Freddie Mac CEOs will not be walking out with their golden parachutes intact (nor should they, in my opinion).

    http://www.bloomberg.com/apps/news?pid=20601087&sid=auug.npwKdPE&refer=home

    Taka

  • 0

    Betzee

    Now that the US Congress has bailed out Wall Street the world has evidence enough that the free market ideology was nothing but false ideology.

    What it demonstrated, as Tom Friedman put it so well, is that the "government’s job is to police that fine line between the necessary risk-taking that drives an innovation economy and crazy gambling with other people’s savings in ways that threaten us all." Indeed, that's why foreigners put their money in America, Wall Street wasn't Las Vegas which many stock markets are in reality.

    This lesson has already been learned by some. For example, "[a]s the Enron affair mushroomed into a national scandal that engulfed other major corporations and accounting firms, even Alan Greenspan, the biggest and baddest free marketer of them all, experienced a few moments of angst. Until that tormented summer, he had always believed that government regulation of corporate integrity was 'utterly unnecessary and indeed, most inappropriate,' as he told Congress. Then he confessed, 'I was wrong.'"

    To correct this problem is an urgent matter since pensions have become privatized (an unavoidable phenomenon given the aging population and increasing life expectancy). I remember listening to a lineman who worked for Enron and was approaching retirement. He expected to enjoy the nearly one million dollar pension he had accumulated through hard work and frugality, i.e., he was putting much more of his paycheck into the company pension fund than his colleagues. After the stock fell it was worth less than a buck. This should not be allowed to happen.

  • 0

    Betzee

    Some people may not realize they are invested in the stock market. If you work for Uncle Sam, for example, you are offered the option of putting x percentage of your paycheck into a pension fund (the public equivalent of a 401(k)). Contributions will be matched (though it maxes it out at certain point) making it a really good deal. Having opted for the maximum pension deduction, I spent some of the week ascertaining who was managing the fund, which I knew had been contracted out to a private firm, and what stocks were in the portfolio.

  • 0

    TonyUS

    >

    Funny Taniwa seems you repeated about half of my words with your own. So seems you agree half way.. hahaha

    The only thing you left out was how China is capable and how China come about to carry our debt... FROM US!!!!!! US policies started back in nixon's time when openning up dialoge with CHina and Carter continuing to engage with them and so on.

    But as for de-regulation you are right but not just financial markets. ,, everything, and as for no competition these days, there is none when it comes to major corporations such as oil industry, gas industry all energy related industries, so there is no limit on price and profits of these corporations. and it is driving many to the breaking point because of rising costs on all items because everything is connected to energy, if not in production , then in transporting the goods..

    Do not want to touch on to much or go into depth to much either or the point gets lost, it seems..

    But one thing for certain as long as there are different leaders of different regions ,, there is going to be conflicts, At this time in period we are supporting China’s build up so to face a conflict with them later and that is only proven fact through out history and the reason , as you have said, why Iran, China and others are building militarily.

  • 0

    taniwha

    You know there are many many good reasons why the USA might want to invade and conquer other developing or developed economies. But that doesn't make it a good idea. The notion of ruling the world through military domination has happened before, it doesn't last all that long, and the aggressor inevitably gets crushed by some other aggressor.

    What's the point of laying down the foundation of our own destruction?

    Before America there were empires. China was one of them. But looking at China today, there just is no evidence that government has any evil designs. It rather appears to be focused on maintaining a grip on what it regards as traditionally its own.

    I think we are in agreement over the immediate situation.

    I've been arguing it on JT since 2000 is that Capitalism and Nation states are in contradiction and this is the underlying reason for all of the wars between nations in the 20th century. Now Capitalism has run its course, which means conflict between ruling elites is inevitable. With no markets left from which to profit they must necessarily take control of each others markets. If that's not possible they must simply pirate each others resources. These are desperate times, driven by pure greed.

    There is no way in the world to avoid a nuclear war in the next few years. unless the means to control production are given to the people of the world. At the moment corporations control forces of production in most every country. They dictate policy to governments, there is no real democracy anymore. There is absolutely no reason why this world and all its people cannot share the resources of the planet. We all have something to share with each other. There is no reason at all why poverty should exist on the scale it does, when there is so much wealth and knowledge in this world.

    Why do we allow the wealthy elites in each country and their corporations to drive us all into a world depression and then to annihilation through war. People should be beginning to realise this.

Back to top

Login to leave a comment

OR

Follow us

Facebook
Twitter

More in World

View all

View all