Money, is the source of all power, and it is a consensual mass hallucination.
I work all week, and I get a piece of paper with a number on it, I'm happy, because I can put that piece of paper into an ATM, and people will give me stuff, real stuff, food, booze, gasoline, when I show them a plastic card.
Let that hallucination end, like it is in Zimbabwe, and suddenly the world doesn't work.
I can't buy stuff, I can't sell stuff, and I'm not spending all week working for just a piece of paper.
If the system fails, and it's still very close to failure, the country stops.
So all this bailout stuff is great if it works, and it's worth doing because if it didn't happen, the result would have been pretty much the same as if the bailout fails.
Here's another little historical chestnut, bailouts all seem to happen in election years, because in election years the time horizon is very close, and in Washington today, November 4 is the farthest most people can see, and these bailouts have a very good chance of looking successful on November 4.

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“ The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.”

Adam Smith , The Wealth of Nations 1776

"We have always known that heedless self-interest was bad morals; we know now that it is bad economics"
FDR's second Inaugural Address

Galbriath wrote way back in the early 60's that the consumerism being foisted upon us was going to one day change us fundamentally......and it would not be pleasant, I bet he’s smiling right now.

Heres a blurb from/on The Affluent Society;

Galbraith's main argument is that as society becomes relatively more affluent, so private business must "create" consumer wants through advertising, and while this generates artificial affluence through the production of commercial goods and services, the public sector becomes neglected as a result. He points out that while many Americans were able to purchase luxury items, their parks were polluted and their children attended poorly maintained schools. He argues that markets alone will underprovide (or fail to provide at all) for many public goods, whereas private goods are typically 'overprovided' due to the process of advertising creating an artificial demand above the individual's basic needs.

The inferences are clear and hold great truth, though I disagree with his conclusions as to mandating mechanisms away from such.

Its all about manufactured demand and the like.

Americans are so well off regards standard of living they have forgotten what rich really means and what it costs. We have sold our souls today for immediate gratification and damn the future.

The gov. gave the people what it wanted and here we are.

__________________
No individual can plan his own existence in their view.

So the state planners must arrogate to themselves the right to manipulate any sector of the economic system if the good of “society” or the “general welfare” is paramount.

Ipso- if the rights of the individual get in the way, the rights of the individual must be sublimated.

The Road to Serfdom
FA Hayek (interpretation)


Mortgage Backed Security survivor

"Money is like a game of musical chairs, there are no losers until the music stops"

__________________
"Democracy is two wolves and a lamb discussing what's for dinner.
Liberty is a well armed lamb willing to contest the majority decision!" ~ Benjamin Franklin
"Diplomacy is the art of saying Nice Doggie! while you're looking for a rock. ~ Wynn Catlin
"There are no innocent civilians." - Gerneral Curtis Lemay. A.K.A Bombs away Lemay

America has been a socialist state strictly speaking since...the Great Depression or earlier.

With that out of the way, I agree with you and remain skeptical that throwing good money after bad will be good for the economy.

Just a few years ago, these companies lobbied to change bankruptcy laws to make it more difficult for individuals to file bankruptcy and write off debt. Now, faced with their own debts and potential bankruptcy, they've lobbied the government to pay the debts for them.

I didn't know that the ownership of capital was banished during the great depression.

__________________
"Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!"

I can't argue with that. We are witnessing a historical singularity of monumental proportions.

It is appalling that the government--which is supposed to represent the people--pays off the debt of the middlemen (financial institutions); not the debt of the debt holders (the general public).

The emergency stimulus should be to pay off public mortgages, and credit debt, not to give the money to the companies who either loaned the money, or invested in the loans.

This looks like a Ronald Reagan trickle down economic plan, at the expense of the tax payer--not that Reagan would have approved of suck (Freudian slip ) matters, though I seriously doubt he would throw that kind of money to pay off public debt.

This situation should make everyone look at John McCain's economic policies with a critical eye, because when it comes down to it, this is one area where John McCain is seriously out of his depths, and would do more harm than good.

This is a disaster, and I'm sure it will make or break some political careers, not to mention empty our pocketbooks.

I'm sure this may have some positive effect.

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Big Number of 2008
8,217,246
Obama's Margin of Victory

"Shake off all the fears of servile prejudices, under which weak minds are servilely crouched. Fix reason firmly in her seat, and call on her tribunal for every fact, every opinion. Question with boldness even the existence of a God; because, if there be one, he must more approve of the homage of reason than that of blindfolded fear."

-Thomas Jefferson

One note of interest: Banks that moved their debt offshore--to keep it off their balance sheets--are not going to get a bailout.

__________________
Big Number of 2008
8,217,246
Obama's Margin of Victory

"Shake off all the fears of servile prejudices, under which weak minds are servilely crouched. Fix reason firmly in her seat, and call on her tribunal for every fact, every opinion. Question with boldness even the existence of a God; because, if there be one, he must more approve of the homage of reason than that of blindfolded fear."

-Thomas Jefferson

and a few rocks neded to be turned over along the way..."affordable housing"? uh yea well this wasn't the way to do it was it?
Stated income, a family with 50K income buying a 450k home, dodgey credit, these things are not conspiracies they are life, when you waive those benchmarks here we are...


Barney's Rubble

Barney Frank didn't like our recent editorial taking him to task for his longtime defense of Fannie Mae and Freddie Mac, and the Congressional baron defends himself in his signature style here. We'd let him have his say without comment except that his "whole story" is, well, far from the whole truth.



Mr. Frank contends that he favored "very strong reform" of Fannie Mae and Freddie Mac, even before Democrats took over Congress after the 2006 elections. To adapt a famous phrase, this depends on what the meaning of "reform" is. Mr. Frank did support a bill that he and others on Capitol Hill described as reform. But on the threshold reform issue -- limiting the size of the portfolios of mortgage-backed securities (MBS) that the two companies could hold -- Mr. Frank was a stalwart opponent.

In fact, Mr. Frank was publicly arguing for an increase in the size of their combined $1.4 trillion portfolios right up to the day they were bailed out. Even now, after he's been proven wrong about a taxpayer guarantee, he opposes Treasury's planned reduction in the size of the portfolios starting in 2010, according to a quote attributed to him in this newspaper last week. "Good luck on that," he reportedly said. Mr. Frank's spokeswoman hung up the phone when we sought confirmation Tuesday.


The MBS portfolios have long been both the chief source of the systemic risk posed by the two mortgage giants and of the profits that so handsomely enriched shareholders and officers alike for decades. Without the extreme leverage inherent in those portfolios -- which the companies borrowed heavily, at taxpayer-subsidized rates, to accumulate -- their federal takeover might never have become necessary.

For years, Mr. Frank and other friends of Fan and Fred opposed not only bills written to limit the size of their portfolios, but any bill that in their view gave an independent regulator too much discretion to order a reduction. This was true of the reform that his House committee passed last year. Only when the White House caved to Mr. Frank and dropped its earlier insistence that a reform bill rein in the portfolios did Mr. Frank move his bill.

In his letter, Mr. Frank also repeats his familiar claim that Fannie and Freddie are vital because they support "affordable housing." This is political smoke. The awful irony of Fan and Fred is that they have done very little to assist affordable housing. Most of the taxpayer subsidy has gone to enrich shareholders and Fannie managers, as a 2003 study by the Federal Reserve shows.

Mr. Frank says he favored the disclosure of Fannie and Freddie compensation -- which is nice, but beside the point. The source of the rich pay packages was the Fannie business model that Mr. Frank fought so hard to protect. Instead of helping the poor, Mr. Frank was enriching Jim Johnson, Frank Raines, Angelo Mozilo and Wall Street.

If Mr. Frank thinks his "affordable housing" goals are so popular, he can always ask Congress to appropriate money for any housing subsidy he desires. But he knows those votes are hard to come by. It's much easier to have Fannie and Freddie take inordinate risks, even at taxpayer expense, so they can pay a political dividend called an "affordable housing trust fund" that politicians will disperse. In opposing genuine reform of Fan and Fred, Mr. Frank wasn't acting like a principled liberal. He was protecting corporate giants while hiding their risks from taxpayers until the middle class got stuck with the bill.

Barney's Rubble - WSJ.com




for a look at some of the issues adressed in past years going back to 2003 -
Fannie Mayhem: A History
A compendium of The Wall Street Journal's recent editorial coverage of Fannie and Freddie.
Fannie Mayhem: A History - WSJ.com

__________________
No individual can plan his own existence in their view.

So the state planners must arrogate to themselves the right to manipulate any sector of the economic system if the good of “society” or the “general welfare” is paramount.

Ipso- if the rights of the individual get in the way, the rights of the individual must be sublimated.

The Road to Serfdom
FA Hayek (interpretation)


Mortgage Backed Security survivor

Suppose for a minute that the government decides to step back and let the markets run their course. What would happen? Would inaction really be worse than action? And is this much action really necessary?

I'm also curious why this matters to the government, if at all, from a national security perspective.

__________________
No man is an island...
Each man's death diminishes me,
Because I am involved in Mankind.
And therefore, never send to know
For whom the bell tolls;
It tolls for thee.
—John Donne

Well it would mean that we would have a total collapse of the financial system. People wouldn't be able to get any loans for houses which would make the housing crisis get much worse than it already is, people wouldn't be able to borrow to get cars, and people wouldn't be able to get the capital to start small businesses. Also big business wouldn't be able to raise capital which would mean no new investment and possibly would have to lay off even more workers than it already is and many would have no choice but to shut down since they have no sources of liquidity. In other words think of the great depression all over again. Unemployment was around 25% then. We have a long way to go and I'm sure you have never seen the sort of poverty that would be spread all over the country and bleed into others all over the world. When people are rioting in the streets over it I'm pretty sure that would then be a national security problem.

__________________
"Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!"

This all seems like a quick-fix solution, I suppose.

__________________
No man is an island...
Each man's death diminishes me,
Because I am involved in Mankind.
And therefore, never send to know
For whom the bell tolls;
It tolls for thee.
—John Donne

In all this bailing out - there has been no real discussion of how to fix the problem.
This bailout is akin to someone being rushed to the hospital with a severe cut that is bleeding profusely and all that is being addressed is replacing the loss blood. Even as the cut still lies open bleeding.

No one has even mentioned HOW TO FIX the problem.
Look - we had an economy that was overwhelmingly dependent on consumers borrowing more and more...the money being spent never existed....until finally enough of the borrowed debt exchanged all the hands it could go through until it eventually reared itself.

$700 billion will not fix the problem...it may however delay it for awhile.

Well people are talking about either adding new regulation or reforming the regulatory system without necessarily having more. These things are not as urgent as the immediate crisis and shouldn't be done too hastily. Goldman Sachs and Morgan Stanley have decided become bank holding companies which I see as a improvement since they will be less risky although less profitable as well.

__________________
"Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!"

__________________
Terrornoia: how the propa-ugandists used the omni-territorialization of terror for the fundamen-talismanization of criminal law in a multi-cultus-ritualistic society