US Economic Bailout Plan

[Antares]

What are your thoughts on this proposed 700 billion dollar bailout?
and who the fuck borrows money from China?!
Theyre communists!
We hate communists! :P

[Maverick]

The money won't be borrowed but simply printed. I think this will make the problem worst as it will prevent the market from correcting itself and it will just postpone the inevitable deep recession - at the expenses of more inflation hurting average people while the wealthy profit from it

700 billion isn't the real amount. It will be much more than that. 700 billion is just a foot in the door for an eventual blank check.

[The Batman]

I think that they should just leave it all alone. Every since Bush tried to fix the Mortgage crisis the economy went to shit.

[redcar]

I think that they should just leave it all alone. Every since Bush tried to fix the Mortgage crisis the economy went to shit.
Bust trying to fix it is not the problem. This problem has been escalating for about the last 10 years. When property prices in the 90's started to go up. On one hand you had banks recklessly giving mortgages to people, people who in a million years should never have a mortgage and then on the other you had people lying to banks, over estimating income. Then property prices dropped and people were left with negative equity on top of that couldn't pay the mortgage and when the banks went in to get their money bank, with the negative equity there was nothing but a loss.

Then banks stopped lending to each other because they are afraid and low and behold banks suddenly run out of money, because it is all tied up elsewhere, and then bust.

Bush didn't do this. His attempt at a solution didn't do this. The economy has been fucked for the last 10 years at least.

[Whisper]

Bust trying to fix it is not the problem. This problem has been escalating for about the last 10 years. When property prices in the 90's started to go up. On one hand you had banks recklessly giving mortgages to people, people who in a million years should never have a mortgage and then on the other you had people lying to banks, over estimating income. Then property prices dropped and people were left with negative equity on top of that couldn't pay the mortgage and when the banks went in to get their money bank, with the negative equity there was nothing but a loss.

Then banks stopped lending to each other because they are afraid and low and behold banks suddenly run out of money, because it is all tied up elsewhere, and then bust.

Bush didn't do this. His attempt at a solution didn't do this. The economy has been fucked for the last 10 years at least.

Agreed
This is a direct result of the "American dream" bigger, better, newer
tens of millions of people living well beyond their means
There's always a boom and bust if memory serves right the last one was the .com crash in the early 90's

The problem is this one is bigger
The world economy as a whole is slow to begin with
The wars are costing allot
And this time the people that are going to be severely hurt are the middle to lower class not a small group of risk takers
And the middle to lower class are America's bread and butter, there the ones that shop till they drop on credit cards, that take out second mortgagees, etc...

Bush is trying to delay and soften the blow


As far as borrowing money from China
America does it everyday in the billions
Has for years

[Underground_Network]

First down will go the United States' economy, then some other big country, then the entire global economy will be fucked, and some greedy bastard will start a war on a global scale a la World War III.

At this point, it doesn't matter what they do. Each method they have of fixing this [or not fixing this] leaves us similarly fucked. The world is in flames, people just don't want to see it that way. Our way of life is too full of greed and 'take, take, take', we need to learn to save and to not get so greedy, to live with what we have. If there weren't so many greedy, lying assholes out there, well, the United States [and the entire world] wouldn't be in the state[s] it's in right now.

[Whisper]

.....War costs money
An arms race costs money
Nobody wants a massive war during a horrible economic recession
Not to mention the west is tired of war as is

The United States recession has been affecting other economy's like the UK, France, Japan, even China, etc........
Canada's going to be hit BAD because we are deeply tied to you
My family's already feeling it
since 9/11 with the boarder
tourism's takin a bad hit

The United States is the last super power (for now)
Your economic decisions
Your political decisions wither domestic or foreign
effect the entire globe

[Techno Monster]

God, bush comes up with stupid crap. if it wasn't for him, we wouldn't be in this mess.

[Antares]

He still hasn't admitted that the stimulus plan hasn't worked. Thats why when I grow up im gonna move to Canada or Australia! :P lol

[tbboltz92]

It's bull shit in my opion this wont help it will only hurt. tyhe average american works his ass off and these corprate junkies get big daddy bushes help. Its crap!!!!!!!!!!!!!!!!!!!!!!!!!

If you dont like my opion then sry but this is how I feel.:eek:

Bill Clinton shuld have run again. He could fix this mess. He had the best budget plan ever CLINTON 2012!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!

[CaptainObvious]

tbboltz92, you have no idea what you're talking about.

Yes, the bailout will rescue Wall Street financiers who I think deserve to go bankrupt as a matter of economic principle. And believe me, if it were possible to let them fail and not have any consequences for it,I would be pushing that option all the way.

But that's not possible. The financial system does not exist in a vacuum. The current credit crisis has frozen the markets and initiated a selling panic. While Congress argued about the $700 billion bailout yeterday, over $1 TRILLLION of shareholder value was erased on the market. This isn't rich people's money we're talking about, either - this is normal people's savings funds, retirement accounts... it's a big problem. Not implementing the bailout has already cost more to citizens of America than implementing the full $700 billion bailout would (this difference is even larger when you realize that because of the equit stakes and other assets the government would get in return for a bailout, the government is projected to break even and get the bailout money back or even make money on the deal).

Everyone needs to stop wishing for a perfect outcome and realize that trying to stick it to Wall Street could destroy the entire country's economy and the wealth of millions of normal Americans. The bailout must be passed, and fast.

[Maverick]

Your views have changed rather quickly, oneshyguy.

This is a bad way to look at the issue, in my opinion. You're being alarmist; America is nowhere near credit-based economic collapse.

Anyway, we pass this bill and its going to destroy the dollar. Or at least help destroy it. Any competent person knows that inflating a currency devalues it. We aren't on a gold standard - only pieces of paper (fiat) and you can't print money to create prosperity.

The economy is going to go through a tough recession one way or the other - printing money is just going to make food prices and other commodities skyrocket. When it costs more money to eat, heat your house, drive to work, etc, its not going to matter you can't get a mortgage, car loan, student loan, etc.

Everyone needs to stop wishing for a perfect outcome and realize that trying to stick it to Wall Street could destroy the entire country's economy and the wealth of millions of normal AmericansLike I said, the bailout won't help preserve the wealth of Americans but its a fast track to destroying it. When a currency is destroyed, the wealth and savings of all Americans and those with dollars are wiped out completely. Left nothing but worthless and rejected pieces of paper.

[tbboltz92]

In my opion our ecomy was destroyed the second bush took office. And we wouldnt be in this position if the rich people were policed on what they could and could not do. I think Bill Clinton should be elceted preident again! He was one of the best presidents we had as far as our budget goes. Iam leaving the us as soon as turn 18. Maybe I can live in a country with a stable goverment.

[CaptainObvious]

Your views have changed rather quickly, oneshyguy.

Wrong. My words were imprecise and so it is easy to get confused by the difference, but that post was talking about a different thing. I was responding to your assertion that the national debt was impossible to pay off and so America's economy must collapse. That was - and is - wrong. America's national debt is huge, but payable (in the long term).

What I'm talking about now is a potential massive retraction of economic growth due to a massive liquidity crisis and ensuing lack of credit. This issue is real, and while it sounds like I'm contradicting myself this is a different issue.


Anyway, we pass this bill and its going to destroy the dollar. Or at least help destroy it. Any competent person knows that inflating a currency devalues it. We aren't on a gold standard - only pieces of paper (fiat) and you can't print money to create prosperity.

The economy is going to go through a tough recession one way or the other - printing money is just going to make food prices and other commodities skyrocket. When it costs more money to eat, heat your house, drive to work, etc, its not going to matter you can't get a mortgage, car loan, student loan, etc.

Like I said, the bailout won't help preserve the wealth of Americans but its a fast track to destroying it. When a currency is destroyed, the wealth and savings of all Americans and those with dollars are wiped out completely. Left nothing but worthless and rejected pieces of paper.

This entire part of your post makes absolutely no sense, for one very, very key reason: no money is being printed. The $700 billion is coming from the government, aka the taxpayers/potentially foreign creditors via a deficit. No money is being created, so how could the dollar possibly devalue as a result of the bailout, exactly?

But you want to talk about what will destroy the dollar? If the bailout isn't passed, credit dries up completely, and businesses are unable to pay their staff or continue operations. The US economy will tank, and the dollar will drop precipituously. It's going to drop a certain amount anyways, because the US economy is going to shrink as a result of this crisis even if there is a bailout, but without a bailout, it will be much, much worse.

[Maverick]

You don't understand how American monetary policy works then. The government has no money. We're broke. How can the government have money when we just had a ~$500 billion dollar budget deficit.

The money won't come from taxes. We don't have 700 billion dollars to spend. What the government is going to do should this pass, they're going to go to the Federal Reserve (our central bank) and they're going to monetize the debt and create the money out of thin air to pay for this.

So yeah this counterfeit and irresponsible monetary policy has played a large part of the mess the United States is in. It allows the politicians to be Santa Clause by starting all these government programs and spending without having to raise taxes to a level at they should be to afford them. Like what Congressman would reject this system when they can come home to their constituents with more "free lunches" without an increase in taxes?! Sure they may get a free lunch but all the money's value has been diluted as a result of the money creation.

So yeah Congress will go to the Federal Reserve and ask for a loan to pay for this. Taxes will be used to pay the interest on the loan, not actually providing the loan itself!

America has gotten away with this monetary scheme because we had the privilege of being the world reserve currency and people accept these paper dollars as if they have any kind of value. One day the world will wake up to this and there will be a run on the dollar.

[CaptainObvious]

So the U.S. government monetizes the debt. So what? Nobody's going to take a run at the dollar because the mechanics of the bailout are such that the government will, over the next few years as the credit crunch expires and the markets get operating normally again, be able to recoup, through sales of equity stakes and so forth, what is projected to be the entirety of the amount of the bailout.

Knowing this, nobody's going to run the dollar down because everyone knows even if the short term effect could be considered significant enough to depreciate the dollar, it's not necessarily going to drop drastically. Although the recession that's coming could and probably will result in some depreciation, that's happening whether or not the bailout is passed (and worse if it isn't passed).

[The Batman]

Umm The bailout was not passed it was shit anyway. What's the use giving money to the businesses and taxing the citizens for it in return. No matter what we were fucked. I think they should just leave it alone and let it correct itself.

[Antares]

It's going to the Senate now.
I don't understand how this is happening since it did not pass in the House. All appropriations bills start in the House. Anyways, umm yeah i dont understand but the government should NOT control business. That is not the way our forefathers intended it and that is not a good way. If they want to help they can go ahead and stop being so generous with money that doesn't exist for OTHER countries and pump the money back into the frickin United States of America.
No where else.
They can also do some more things with welfare and other stuff. Actually looking into the incomes and excomes (is that a word) of families instead of just incomes. The majority of the American people are poor because they have no help because they aren't eligible for assistance because of what they are earning BEFORE taxes. They need to start looking at what is coming in and what is coming out AFTER taxes. Dumb a holes.

[CaptainObvious]

Because the government gets the money back, and there are TRILLIONS OF DOLLARS of stock value being erased because there is no liquidity in the economy. That is much worse than the situation we'd be in if the bailout was passed, and it's only getting worse.

[Antares]

Because the government gets the money back, and there are TRILLIONS OF DOLLARS of stock value being erased because there is no liquidity in the economy. That is much worse than the situation we'd be in if the bailout was passed, and it's only getting worse.

You're over reacting. Shit happens. Then it fixes itself. It is just the fact that it is going to be crap during the time after the shit and before the fix.
I am not sure about the "erasing" part considering its a GREAT time to buy right now.
Anyways, I wish Clinton came back too. His administration made our economy PROSPER. The ONLY president to do so. After Bush it went to crap. I wish I could show you a graph. Its frickin amazing to see.

Do you not understand that the US is beyond broke. We have NOTHING. We have nothing to back what we are "spending". We are getting money loaned to us from China and other counties which is putting us further in debt. We have nothing to our name. We ARE nothing. 9 trillion dollars in debt. That is 9 trillion dollars to pay back to the people we are borrowing. So it is not the US that is giving money, its frickin China.
The US is worth 13 trillion dollars (GDP)
I can't find how much the US "makes" each year but anyways were screwed but life is not that bad.
Also, no this is not another great depression. Maybe Recession but not Depression because the stock market crashed ENORMOUSLY in 19...39? and nothing compared to the 777 points yesterday.

[CaptainObvious]

You're over reacting. Shit happens. Then it fixes itself. It is just the fact that it is going to be crap during the time after the shit and before the fix.
I am not sure about the "erasing" part considering its a GREAT time to buy right now.
Anyways, I wish Clinton came back too. His administration made our economy PROSPER. The ONLY president to do so. After Bush it went to crap. I wish I could show you a graph. Its frickin amazing to see.

Do you not understand that the US is beyond broke. We have NOTHING. We have nothing to back what we are "spending". We are getting money loaned to us from China and other counties which is putting us further in debt. We have nothing to our name. We ARE nothing. 9 trillion dollars in debt. That is 9 trillion dollars to pay back to the people we are borrowing. So it is not the US that is giving money, its frickin China.
The US is worth 13 trillion dollars (GDP)
I can't find how much the US "makes" each year but anyways were screwed but life is not that bad.
Also, no this is not another great depression. Maybe Recession but not Depression because the stock market crashed ENORMOUSLY in 19...39? and nothing compared to the 777 points yesterday.

Now is a great time to buy because stocks are tanking. You don't consider the value losses a bad thing because you don't have money in the stock market. But across the nation, normal families are losing large amounts of savings - for retirement, college, etc. - and it's hurting. If people stay in the market for a few years, they will probably end up fine, but lots of people near retirement or otherwise in need of access to the value in their stocks are screwed. That's not to mention the massive chaos that will result if the crdit markets do not unfreeze - businesses won't be able to pay salaries, and lots of companies who weren't exposed to this subprime crisis directly could fail.

The United States, while definitely in debt, does not have "nothing" or nobody would buy its debt. We're not at that point yet, nor are we close - America is still backed by its productive capital, workforce and technology.

Finally, while this is not yet as bad as the stock crash of 1929, that doesn't mean this isn't the start of a serious problem. In 1929 the stock market crashed by 40%. The market today is already down 25% from last October. And normal people are much more involved today in the stock market than they were then. This has the potential to be big, and ignoring it by playing it down as "shit happens" won't make it any less of a problem.

Nobody has yet addressed the point I make that the cost of the bailout will be less than the additional cost in equity losses and company failures due to lack of credit if the bailout is made. The simple fact is that no bailout is more costly than bailout, and nobody seems to want to address that.

[rsc4life]

The bailout plan is akin to duct-taping a sinking ship.

[redcar]

It might work. Our Government is finalising emergancy legislation that will guarantee every Irish bank, worth €400 billion. All deposits, no matter how big will be safe, all debts will be underwritten, everything made nice. Our stock exchange reacted very positively to it. Foreign investors stopped taking money out of our banks.

It worked for us.

[CaptainObvious]

Yes, as redcar mentioned, Ireland has rescued its own banking system, at a significantly higher expense (the cost was over Ireland's annual GDP, which the US bailout is not) than the US, and it has turned out well. Meanwhile, American investors lose trillions. Good move delaying the bailout...

[Antares]

In response to Alex, the US has the FCIC which protects everything to like 100,000 I think.
In response to OneShyGuy umm yeah.
First, the Stock Market crashed like 90% (http://eh.net/encyclopedia/article/Bierman.Crash).
Meanwhile we have a 7% crash now (http://dhirendra.wordpress.com/2008/10/01/dow-jones-stock-market-778-point-7-crash-1/)

Whatever my point is this is miniscule. Shit happens like I said. Look here (http://en.wikipedia.org/wiki/List_of_stock_market_crashes) and you will see that this happens. The issue now is that america is huge and there are a lot of people with a lot to lose. I dont think that paying CEOs is the answer. I think that providing support is.

Meanwhile, American investors lose trillions. Good move delaying the bailout...
I don't see your reasoning behind wanting this bailout. What will it do? The stimiulus package failed otherwise we wouldn't be in this predicament now. That was a few hundred million so how will this help? Paying random people money just for the fun in attemtps to alleviate debts. That is crap. Seriously, I don't want to see government which should NOT be interfering in business in the first place pay. Government is for the people and if they really wanted to help they would be doing things that help us directly.

I mean how stupid could the Bush admin. be?

[Whisper]

Erugh..
There not giving 700billion to CEO's
There taking over the failing mortgages that the people can't afford to make the monthly payments on and the gov will hold onto them until the market can reabsorb them

[CaptainObvious]

Uranus, is that the deepest analysis of this situation you are capable of?

The bailout is not about paying off Wall Street exercs. The bailout is a response to the fact that if liquidity is not injected back into the system, the credit market will dry up - and America depends upon the credit market to operate, or the economy goes down. Hard.

On the other hand, this debate is over, because the House and Senate have already realized that the bailout is necessary for exactly the reasons I outlined above, and have put it into place, which should stem the massive downturn in the markets.

Otherwise, America would be in much worse shape.

[Maverick]

The Fed has been pumping liquidity for the past year. Proved little good. You can't solve a problem created by monetary excess with more monetary excess. The United States can't have a viable economy with loose monetary policy.

A politician described this bailout perfectly as a fix for a junkie.

[Antares]

Erugh..
There not giving 700billion to CEO's
There taking over the failing mortgages that the people can't afford to make the monthly payments on and the gov will hold onto them until the market can reabsorb them

It is totally not just mortgage however. It is insurance and other crapoda on top of the pork barrel politics that is included in this bill which is a waste also.

Uranus, is that the deepest analysis of this situation you are capable of?

The bailout is not about paying off Wall Street exercs. The bailout is a response to the fact that if liquidity is not injected back into the system, the credit market will dry up - and America depends upon the credit market to operate, or the economy goes down. Hard.

On the other hand, this debate is over, because the House and Senate have already realized that the bailout is necessary for exactly the reasons I outlined above, and have put it into place, which should stem the massive downturn in the markets.

Otherwise, America would be in much worse shape.

This debate doesn't have to be over. I think I am providing a deeper analysis of this situation to you are. I know that this is a very horribly planned pre-schoolers way to patch a problem. People are broke so just give them more money. That is not the higer level problem solving and thinking that is needed to run the most influential nation in the world.
I think that this was a bad move for many politicians. I think the majori (as i hear right now on cnn it may put politicians carrers at risk, sorry wolf blitzer just said that) ty of the American people were against it.

The bailout is a shitty way to "patch a problem" and I firmly believe it won't work. Just like the stimulus.

America will continue to sink. Canada FTW! lol jk but umm yeah America is becoming a crappy place to live and I hope things will be better when Bush's country idiotic ass gets out of office (and I mean that in the best way possible).

[CaptainObvious]

...sigh... if the best opinion of the bailout plan you can offer is "People are broke so just give them more money", this really isn't a debate worth having. there is so very much more vitally important complexity to the situation the economy is in that you ignore in your rush to achieve a quick and easy viewpoint.

I'll take my leave now.

[0=]

If you think the bailout plan will help anything in the long run you've got a screw loose; it will just delay the inevitable and probably make it worse.

[CaptainObvious]

Delay the inevitable? What's the inevitable?

The bailout is not about making sure that Wall Street firms are able to maintain solvent. That's not the issue. The bottom line is that the companies that are going to fail will fail with or without the bailout. But with the bailout, the larger American economy will be protected, since the credit market will not fail. Without the bailout, the credit market might have failed due to lack of liquidity, which could literally destroy the American economy.

This is not a zero sum game.

[0=]

The United States economy is based on a high rate of consumption which cannot be sustained forever, so it will ultimately fail unless the underlying support is changed; a band-aid will just delay it by a few years. People need to stop with the whole "American dream" bullshit. Living the American dream has become just that: a dream. People need to stop borrowing money for everything they buy.

[Hyper]

Hmm like others have said an economy can't survive on burrowed money

Eventually the amount of people burrowing money will decrease and the overall shopping capacity of the people decreases.. And that'll break down the industries

And cause even more shit, exactly as its doing here.

[CaptainObvious]

The United States economy is based on a high rate of consumption which cannot be sustained forever, so it will ultimately fail unless the underlying support is changed; a band-aid will just delay it by a few years. People need to stop with the whole "American dream" bullshit. Living the American dream has become just that: a dream. People need to stop borrowing money for everything they buy.

This post is full of meaningless generalities. Yes, America needs to stop borrowing to finance consumption. Yes, America needs to draw down its massive current account deficit (largely linked to the government budget deficit) and stop overconsuming.

However, what you've said is irrelevant to the current bailout. Let me use an excellent example to demonstrate why the bailout is necessary: alcohol addiction.

When an alcoholic (a heavily-addicted alcohol, mind you) starts going into withdrawal, they can eventually experience delirium tremens and die. To avoid that happening, they are placed on an alcohol drip that is gradually tapered, to avoid death.

The bailout is very similar. With or without the bailout, a lot of people will be foreclosed, a lot of heavily over-leveraged banks will fail, and there will be economic hardship.

The difference is, without the bailout a lot of businesses who are not at all responsible for the crash will fail, because of the massive panic in the credit market. These businesses do not have to fail; they were not involved in creating this problem and do not need to be destroyed by it. The bailout provides liquidity in the credit markets so that such businesses can continue to operate (and many millions of Americans can continue to have jobs), and what is a finance- and mortgage-related crisis does not become a full blown economic panic and crash.

Over the last 2 weeks America came very close to a run on money-market funds, which combined with the selling panic and credit crunch would have immediately erased millions of Americans' retirement savings, and simultaneously destroyed the ability of many small businesses to continue payroll. There would've been a massive, massive economic crash, and there is the extant possibility that another depression could have resulted. You disagree, but the market shows just how wrong you are - when the bailout was thought to not be able to pass, the markets plunged.

At the end of the day, you are right about one thing: America's economy will re-adjust. But with the bailout, the re-adjustment will merely effect those who were involved in the bubble sectors of the economy (housing, mortgage-backed securities), and not the wider economy in general. The bailout was a tourniquet; the US economy will lose a limb, but not die of blood loss.

[Antares]

I am getting tired of you constantly undermining peoples opinions on this issue. Just because your mental capacity is not allowing you to grasp the full yet simplified concept of it doesn't mean I can't.
Your example was not exactly highlighting the important parts of this either. This is not how you described it. First off sure we are 'addicted' however pumping a few dollars into the system to help alleviate the loss of the addiction or however that should be worded does not work. The answer to this is not to stop all borrowing (domestically) because in reality in order to fix the housing crisis people need to borrow. People don't have 200,000 dollars to buy a damn house and usually can't even get close to that. With student loans and other things to pay off. It is not going to happen.
The US economy won't die. idk im tired and I cant think well atm but I know that there are but yea whatever...

[stotty]

I think the bailout plan as many people have already said will help in the short term but not in the long run. I think people should think before they borrow money so they know they can repay it.

[CaptainObvious]

I am getting tired of you constantly undermining peoples opinions on this issue. Just because your mental capacity is not allowing you to grasp the full yet simplified concept of it doesn't mean I can't.
Your example was not exactly highlighting the important parts of this either. This is not how you described it. First off sure we are 'addicted' however pumping a few dollars into the system to help alleviate the loss of the addiction or however that should be worded does not work. The answer to this is not to stop all borrowing (domestically) because in reality in order to fix the housing crisis people need to borrow. People don't have 200,000 dollars to buy a damn house and usually can't even get close to that. With student loans and other things to pay off. It is not going to happen.
The US economy won't die. idk im tired and I cant think well atm but I know that there are but yea whatever...

Well, since you apparently can't even coherently post the "full yet simplified concept of it", maybe I can be forgiven for not seeing what you're getting at?

Bottom line (again): America needs to stop borrowing to finance demand. But in the short term, failure of the credit market - which is basically the liquidity mechanism on which much of the economy relies - would have caused widespread destruction of businesses who are not at all connected to subprime loans or to the mortgage-backed securities and CDSs that brought down Wall Street.

The economy needs liquid money to function. The credit markets provide that liquid money. If they stop working, the economy crashes. The bailout makes sure they keep working in the short term so that the economy doesn't crash, giving the government the opportunity to sort out the mess that has resulted.

Which part of this do you think is wrong/disagree with? Would you prefer we allow the economy to massively crash due to lack of liquidity, put millions out of work and hugely extend the time it will take for economic recovery? Is that a better outcome?

[0=]

Actually, a crash would make it recover more rapidly. The only issue is the effect is potentially more catastrophic. If a crash happens within the near future it will be worse than any prevented crash because the plan is not good for the economy in the long run.

[CaptainObvious]

Actually, a crash would make it recover more rapidly. The only issue is the effect is potentially more catastrophic. If a crash happens within the near future it will be worse than any prevented crash because the plan is not good for the economy in the long run.

Uhh.... what?

Here's what we know:

With the bailout, subprime-involved mortgage brokers, and the Wall Street firms and funds involved in mortgage derivatives will fail, or be "bailed out" (which is basically code for the government assuming ownership of the company's assets, since under the new proposal equity stakes are required for any company receiving bailout money, and then later selling the equity once the toxic derivatives and credit swaps play their way out). Millions of people will be foreclosed because they bought too much house. Many will also be helpd out somewhat by renegotiating mortgage terms, in order that people are able to pay off their debts and also remain in their houses. This will probably end in a recession.

Without the bailout, the same brokers, firms and funds would fail. More people would be foreclosed upon. But also - and this is critically important - thousands of businesses would fail due to inability to secure credit (if you watched the presidential debate tonight, Obama explained this). This would result in dramatically higher unemployment, and in all likelihood, depression.

Please explain how the first situation will result in a faster recovery than the latter?

No offense to anyone here, but can anyone post, in their own words, a detailed and specific reasoning for the crisis, and analysis of the bailout with that in mind? So far, only redcar has posted even bare specifics about the bailout. Anyone else? I'll throw my analysis of the causes in there as well, but I'd like to see some others take a hack at it first.

[Antares]

I'll take my leave now.

When will this happen? I think it is long overdue.

[Bobby]

Let's try to leave the fighting out of your posts, okay guys?

[Antares]

LOL,
yeah umm
So it was passed. Thoughts??

[CaptainObvious]

When will this happen? I think it is long overdue.

For a moderator, that is a pretty spiteful and childish post.

[Bobby]

Stop it oneshyguy. This is a debate, not an arguement. Any further off-topic posts will be infracted.

[george]

Well seeing as how its already passed, I say we just have to ride it out and see what happens.

[Falk 'Ace' Flyer]

Life's a bitch and then ya die.

That's all I have to say about it.

[redcar]

Oh people we are only seeing the climax to this little adventure now. Stock markets collapsing, exchanges being suspended, banks falling like rain... I am just waiting for the final bang.

[Antares]

Lol banks falling like rain :P
Well the Stock market has hit a record low. Somewhere in the 8000s

[Callwaiting]

He still hasn't admitted that the stimulus plan hasn't worked. Thats why when I grow up im gonna move to Canada or Australia! :P lol

lol both Canada and Australia are being similarly screwed, it's just starting here and 300K people are expected to lose their jobs.

[rsc4life]

Hmm? Maybe I'll earn as much money as I can and then move to Swaziland!

Funnily enough, in the United States, actual banks have survived quite well. Plus the fact that we are trying to boost confidence by using the FDIC to insure up to 250k... A good plan.

[baseballallstar]

Ha, I may still be a kid but I am writing a paper over the weekend on the "Credit Crisis" but I came across this quote and things are starting to finally fall into place as to why the bailouts and lowering rates did not work.

FORMER prime minister Paul Keating says there are marked differences between the current global financial crisis and the economic problems experienced during his time in office.

"What we're seeing at the moment is the disintegration of the international financial system," he told ABC Television tonight.

"That's not what we had in 1990. We had a world recession in 1990, it was a business recession, that means business investment fell.

"What we have here is the advanced disintegration of the international financial system."

I also saw on another site that the smart people are not investing in the market anymore because they know its broken......that all seems to make sense...but the more and more money they dump in the system devalues the dollar and prices go up...which eventually leads to the collapse of the dollar...yikes...

[Antares]

lol both Canada and Australia are being similarly screwed, it's just starting here and 300K people are expected to lose their jobs.

Please don't double post rsc and at least in Canada and Australia they don't have people trying to bomb them to damnation :P

[Whisper]

If you plan on immigrating to Australia start planning now
you have 10yrs left and then they won't accept you
25 is the age limit
which means I'm screwed

[Antares]

GASP!
Really?
Maybe we should do something similar to that here...no maybe not.
Anyways, that really sucks. Fine I guess im going to canada because i wont be done wtih school by then

[rsc4life]

I've got dual citizenship French/American. I'm not fussed.

[Antares]

LUCKY! I wanna live in frrance

[CaptainObvious]

I'm Canadian. This crisis is temporary, and recovery will happen. By the end of the week I will have all my savings in an aggressive mutual fund that invests in energy - assuming the credit market doesn't freeze in the next few weeks, I'm going to make a lot of money, as is anyone else who gets in at this point. Stocks are so undervalued because of the selling panic that it's laughable.

I also saw on another site that the smart people are not investing in the market anymore because they know its broken......that all seems to make sense...but the more and more money they dump in the system devalues the dollar and prices go up...which eventually leads to the collapse of the dollar...yikes...

What does this mean? The market is "broken"? How? And where did you get the idea that investment in the stock market resulted in currency depreciation?

I'm not sure I would write a paper on this topic if I were you.

[The Batman]

I actually want to invest into the market right now while the prices are low, especially on stocks like google. Trust me this will pass one day it might be months or years from now but it will pass.

[Whisper]

my parents have put like 20 grand into forestry
because its in a massive slump and cheap cheap right now
and its one of the most basic commodity's
you need wood to build
period

[iJack]

This better work, my friends site cant go up because of us.
When asked how is site id, he responded: (name changed)
really bad becasue of the dollar
Gatoraide

becasue of the US crissis is afecting me
Gatoraide

thats us.
Me

yeah
Gatoraide

becaue the dollar was like 1 peso was 10 dollars
Gatoraide

dontca love is?
Me

and now
Gatoraide

for first time i see the dollar at 13 and 14 pesos per dollar
Gatoraide

thats a lot
Gatoraide

so i can buy anything in US dollasr right now
Gatoraide

but in 2 moth i hope taht the dolars i going down to 8 o 9 again
Gatoraide

[rsc4life]

Good idea. I would personally invest in goldman sachs. It's only 88 dollars, and it could be running the US finance markets in 1 year.

[redcar]

Or it could collapse next week?

The market is very unstable, nothing is certain.

[rsc4life]

True, the market is completely unpredictable. One day it plummets, even after a plan, the next day we surge. Then it goes down a little. It is ridiculous.

[baseballallstar]

I'm Canadian. This crisis is temporary, and recovery will happen. By the end of the week I will have all my savings in an aggressive mutual fund that invests in energy - assuming the credit market doesn't freeze in the next few weeks, I'm going to make a lot of money, as is anyone else who gets in at this point. Stocks are so undervalued because of the selling panic that it's laughable.



What does this mean? The market is "broken"? How? And where did you get the idea that investment in the stock market resulted in currency depreciation?

I'm not sure I would write a paper on this topic if I were you.

It's a paper on opinion. I just happen to like this topic.

As far as currency depreciation goes, it's pretty evident given measures the fed (a privately owned bank) has tried..like the bailout, lowering rates...that something is wrong, because the old methods are not working well doh...this crisis is global..no longer can you use past history to predict the outcome...anything is possible at this point. If your daring look up "disintegration of the financial system"

Tonight the Nikkei has crashed -1089.02 points (if I am correct thats the biggest drop for the Nikkei in history) . In a global economy all markets are connected.

The entire system is out of whack, I really really hope what I have read and what I say is incorrect, because we are looking at the very least a depression from what "true" figures are saying.

I'll bet the fed is wishing they tackled this subprime issue way back in 03-04 when it was brought to the FBI's attention, but they were busy with other issues like the "war".

[LoneWanderer]

look if they inject 700billion into the economy itll be shit for a short while but it will be better in the longrun, why cant people see that, it can save the economy

[CaptainObvious]

It's a paper on opinion. I just happen to like this topic.

As far as currency depreciation goes, it's pretty evident given measures the fed (a privately owned bank) has tried..like the bailout, lowering rates...that something is wrong, because the old methods are not working well doh...this crisis is global..no longer can you use past history to predict the outcome...anything is possible at this point. If your daring look up "disintegration of the financial system"

Tonight the Nikkei has crashed -1089.02 points (if I am correct thats the biggest drop for the Nikkei in history) . In a global economy all markets are connected.

The entire system is out of whack, I really really hope what I have read and what I say is incorrect, because we are looking at the very least a depression from what "true" figures are saying.

I'll bet the fed is wishing they tackled this subprime issue way back in 03-04 when it was brought to the FBI's attention, but they were busy with other issues like the "war".

Not once in this post did you answer the question: how does investment into the stock market lead to depreciation? If you're talking about the Fed bailout causing depreciation, that may be true (if it comes with attendant rate cuts and the taking on of large amounts of additional debt by the government, which it may or may not), but how in your mind does investment -> depreciation?

The large crashes of recent days are not indicative of global failing. The credit market has remained liquid, which was what was really needed to avert a global crash, and the losses now are largely happening as companies around the world take stock of the effect of the toxic US paper they might have held, as well as the effects of a slowing economy over the next few years.

If you think things are "out of whack", I'd like to see some specific proof of that fact. Or you could start with some specifics, for example what you mean by out of whack.

My frustration this whole thread has been kids posting who don't seem to have any grasp whatsoever of the specifics of the situation but simply repeat secondhand the vague things they've heard. Statements like "the market is out of whack" are meaningless. Specifics! Specifics! We're talking about the finer points of a massive system - to make vague pronouncements is to say nothing.

By the way, I Googled "disintegration of the financial system" and the results were an interview with Keating, which is full of him saying vague meaningless crap as I pointed out already, some news reports convinced of imminent economic collapse - all from a couple of weeks ago, and it hasn't happened yet nor looks likely to any time soon - and a prediction from LaRouche that the markets would collapse within a couple of years... except the prediction was from 1994!

Frauds and fame seekers have always had success in making doomsday pronouncements and playing off the ensuing hysteria. But we're still here, the world hasn't ended, and doesn't look likely to any time soon.