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409 Comments
- inactive, on 11/11/2008, -11/+276Weren't the bailouts and the two trillion in Federal Reserve loans supposed to "prime the pump" and "loosen up credit" to get the economy running again?
It hasn't worked, but Paulson and Bernanke keep shoveling out dollars as fast as they can without even identifying where the money is going. http://digg.com/politics/The_Federal_Reserve_is_re ...
The reality is that this crisis was caused by too much debt. Debt inflated values of the dotcoms and then real-estate. The banks kept taking cheap money from the Fed to keep increasing the debt that Americans carried in order to keep the economy running.
The problem is that we have yearly budget deficits that are going to get worse. We have a negative savings rate. Increasing unemployment and a giant trade deficit. That stark reality gives the market no sign that the US economy will ever be able to generate enough production to work off our existing debt, much less further debt.
We cannot print or borrow our way out of this mess. We need to take the bitter medicine right now and suffer the consequences of our irresponsibility now! - thatsgoodkarma, on 11/11/2008, -0/+142Can I get my money back then?
- NeoBanned, on 11/11/2008, -14/+148It's not a "credit crisis", it's a "re-payment crisis". The American people have become nothing more than entries in the global checkbook.
And to think that our forefathers started a war to free us from these chains of financial bondage. The power to tax, is the power to destroy. - pintomp3, on 11/11/2008, -1/+781. Profit.
2. ????
3. Profit. - leunghoi, on 11/11/2008, -1/+47I agree, and I think the credit shortage might not be a bad thing for us after all. The whole sense of entitlement is causing a lot of wasteful spending (really, do people really need a new phone every year?). Money spent this way is not helping the essentials of our society (infrastructure, better education, good health care system, the good stuffs). That should be reduced.
Furthermore, there are also hard working people who can only survive with credit. People are willing take lower paying jobs due to easy credit. That's why there are so many people who is making non-living wages. If it wasn't for easy credit, the minimum wages would have been increased even more.
There are so many interconnected issues that causes us to be at our current depressing state. As a society, we all need to think more about how we come to this place and how we can get out of it. - songfire, on 11/11/2008, -10/+54It really is a credit crisis. If you follow the LIBOR and see how much it costs banks to borrow from one another, you would see what is meant by "credit crisis". It is invisible to most of us on a daily basis, but when a company cannot get a short-term loan on the money market, then they can't make payroll, buy new equipment, etc. Inconceivable as it is, this was really happening.
This crisis was complicated in its inception and it will be complicated in its repair. Please don't boil it down to a single "taxes bad" mantra. Taxes, when used properly, pay for all of our basic services. The problem with taxes is that they have been abused by people with an inside track into Washington. Then those same people don't want us to look over their shoulder when they are gambling on financial instruments (like credit default swaps) that can destroy our economy. Don't believe me? Ask none other than Alan Greenspan, who championed self-regulation and Ayn Rand style philosophies. He appears to have changed his mind recently...
And re: this article. Almost every economist will tell you that the market is not a great indicator of the health of an economy---our financial problems began around 2005 and the market was soaring then. Please stop posting articles that tie the market and the bailout together. The bailout wasn't aimed at fixing the Dow Jones, it was targeted at getting banks to loan each other money. I'm not defending the bailout, but I'm tired of seeing these things tied together all the time, and I'm tired of people just blaming the government and taxes, when there is more blame to dole out. - inactive, on 11/11/2008, -1/+43Give it a try. If you have any luck please tell us how you did it.
- inactive, on 11/11/2008, -1/+42The idea that war will bring us out of an economic crisis only works when the populace sacrifices by not spending anything and works their asses off to produce materiel de guerre.
That is not going to happen, therefore war is not the answer (and never was) - tgc1, on 11/11/2008, -1/+41Hold onto your butts.
- BXRWXR, on 11/11/2008, -2/+42OK, so where does that leave us?
Besides *****. - Ryfi, on 11/11/2008, -6/+42down with the Fed!
- ChileanGoD, on 11/11/2008, -2/+33...and what's the surprise about this?
- StingingNettle, on 11/11/2008, -1/+30Here is a real live example of what happens when you start bailing out banks and trying to unfreeze credit:
"In the 1980s, Japan ran up stock and property prices in a spree of debt and leverage. Then, when the bubble popped, the usual monetary stimulus didn't work. The Bank of Japan cut rates to almost zero…still, few people were willing to borrow.
The economy did not recover; instead, it got worse and worse until 2005 - 15 years later - when stocks had lost 72% of their value, land was down 81%, and golf course memberships had sunk 95% from their peak.
The problem, he explains, was that it was a "balance sheet recession," not a typical business cycle downturn. Companies, banks, and individuals had to pay down the debt that they had accumulated in the boom; they did not want to borrow more money, even at zero interest rates. For 7 years, from 1998 to 2005, net business borrowing went negative - meaning, businesses were paying off more debt than they were taking on.
This came as a shock to modern economists. Japanese officials were flummoxed. U.S. economists accused them of not acting swiftly enough…or not having the stomach to let the big banks fail. But almost no one seemed to understand what was really going on. They should have. Irving Fisher described it back in 1933, observing that when people who are deeply in debt get into trouble they usually sell assets. He called it a "stampede to liquidity." Investors dump stocks and property for any price they can get - desperate to pay off their debts before they are dragged into bankruptcy."
http://www.dailyreckoning.com/Issues/2008/DR110508 ... - JSavage37, on 11/11/2008, -13/+42What the hell? Are you ***** stupid? Who is the man that is still in office? Bush.
Who is the one that was elected less than a week ago and has no actual power other than a senator? Obama.
He is not making these policies and leading this country. You're a ***** tool of the system, my friend. And, if you noticed, Obama has gathered more economic advisers to consult with than any other president in history. Yeah, more than FDR. So maybe, instead of calling him an idiot in chief, you should call him a listener in chief. And he doesn't even have the in-chief part yet! - StingingNettle, on 11/11/2008, -0/+27From todays DR: "But a 'balance sheet recession' is an unforgiving, mean, and tenacious rascal. After such big losses, businesses, consumers, investors, and banks need to rebuild their balance sheets - by paying off, defaulting on, or working out their debt. And then they need to rebuild their confidence…with rising asset prices and a growing economy. All that takes years…many years.
Worse, a balance sheet recession is like a straightjacket; the harder you fight against it, the tighter it gets. When government tries to prevent assets from being marked to market, for example, it delays and obstructs the process of adjustment. Rather than let the debts and mistakes be flushed out, they remain on balance sheets…blocking progress, frustrating change" - Bill Bonner. - sheeplescareme, on 11/11/2008, -8/+34the crisis was caused by debt, which is our "money." while it was made worse by the evolution of bretton woods II, it is likely that the meeting next week shall make things even worse.
i would love for us to "take our medicine" now and allow the markets to work however that is unlikely to happen. this time shall likely be similar to the great depression whereupon the near deal extended and worsened the situation, only this time it will be the obamanomics and his many social programs and stimulus checks that hasten our demise.
as an aside, the whole world knew that it was a poor idea. when it was announced that it had not passed, stocks rose. immediately upon announcement that it had, they took a large tumble and they still have not recovered properly. - ericdano, on 11/11/2008, -1/+27I have an idea. Why can't the Government bail me out? Forgive my back taxes and credit debut, and let me start anew. Or at least let me reborrow at a 5% or lower rate. I will promise to spend all the money again, and in 10-15 years, we will have to do this all again.
- makenshin, on 11/11/2008, -1/+27Well, most of us didn't think the bailout would work and was a bad decision. My congressperson sent out a letter to all who left her a message about the bailout (another waste of taxpayer money) days before the election defending her decision and saying that the way AIG was acting from their bailout was not appropriate and she was going to make sure that all bailout money would be monitored and there would be accountability. I was quite upset that she was using taxpayer money to basically (though indirectly) campaign to those who didn't agree with her decision to vote for the bailout.
Either way, we need to cut back some government spending and if we are going to spend money and involve the government in the economic recovery, at least redirect the money to job generation to stimulate the economy.
Though I don't agree with the decision here in CA to spend 300+ million per year for a high speed train, at least it will generate lots of jobs here for the next decade or two. - Solkre, on 11/11/2008, -2/+27It blows my mind that a company would need to borrow money to pay payroll, and be considered healthy.
- inactive, on 11/11/2008, -4/+28Right on brother
The point is that we need to let the companies and speculators that are overextended collapse into bankruptcy. Then the good assets will be bought by good companies. That way house prices will return to levels where working people can afford a house.
But we also need to address the fact that we cannot pay our debts or grow or economy without savings and production. We need to forget the globalist lie and impose tariffs across the board to protect the American worker and we need to start saving.
That saving should include the government and start by cutting 320 Billion out of the defense budget and 30 Billion out of the intelligence budget.
We can get out of this mess, but not without pain. The trouble is, the longer we wait, the more pain there will be. - beakerwimp, on 11/11/2008, -4/+27I am a fiscal conservative who cringes at the thought of billions of dollars being mindlessly thrown at our current problems. But just to play devil's advocate... no one (not Bush, not Congress, not McCain, not Obama, not Paulson, etc.) said that the bailout would prop up stock prices in the short term. I am not aware of one economist, Liberal or Conservative (most of whom believe massive federal spending is necessary to help soften the blow by the way), who believed that the bailout would prevent stocks from staying low or tanking even further in the short term. This extreme spending measure had the expressed purpose of slowly instilling more confidence in the system over the long term as we sluggishly get the rest of our policies in order (like reducing spending and reducing our debt burden in general).
So equating stocks falling with "bailouts don't work" is not exactly an honest argument. Actually, its not even in the same ballpark as an honest argument.
Just want to keep things sane. This is coming from someone who doesn't think "bailouts" like this are a good idea. - inactive, on 11/11/2008, -1/+21The bailout is not even being used by banks to lend to Americans, they are using it to take vacations, buy their competitors, and cover their own asses. The bailout money was printed up and is not even backable by us.
The bailout is actually 700 billion (plus another 150 billion) dollars of debt, and a ***** of smoke and mirrors. - sgerwel1985, on 11/11/2008, -1/+19What a huge waste of money...
- SkippyDoorknob, on 11/11/2008, -1/+19When the bailout package first failed to pass, the market proceeded to plunge. When the bailout finally did pass, the market continues to plunge.
I think it's safe to say the market has a mind of its own. - inactive, on 11/11/2008, -0/+17Yeah, who'd thought giving risk free money to bankers would have resulted in:
- cash hording
- paying executive bonuses
- using the money to buy other banks - inactive, on 11/11/2008, -0/+16You're going to be dead eventually anyway. I'd prefer to be free, rich or poor while alive.
- inactive, on 11/11/2008, -9/+25"Join the Resistance".
Wow, you happily stood by and let Bush completely ***** our economy for 8 years, and now you want to resist an as-of-yet powerless and barely existent administration under Obama. ***** moron, you people should seriously get some ***** sense knocked into you. - secrity, on 11/11/2008, -0/+16Bush tried the really expensive war thing -- it didn't work for most Americans.
- dalittle, on 11/11/2008, -3/+18Bailouts are like giving a drunk with a scraped knee a 5th of Bourbon. It might help prevent an infection for a normal person, but throwing good money after bad is just stupid. These business failed for a reason. What happened to let the free market decide?
- zizzybaloobah, on 11/11/2008, -2/+17And interestingly enough, the people voted the same idiots back to Congress. So while we are switching out a president w/an abysmal approval rating, the same even-lower-rated Congress will be back. Pelosi promises "fiscal responsibility" (http://digg.com/politics/Pelosi_Promises_Fiscal_Re ... -- why do I think this ain't gonna happen?
- Shiftgood, on 11/11/2008, -7/+22OK I guess im... dumb.. i thought i was paying attention..
I thought the bail-outs were reserves given to banks that would otherwise freeze loans and halt development for people that wanted to start a business or buy a house...
How would one argue that it should flip the global stock market slump in 1 day? im all ears. - NeoBanned, on 11/11/2008, -2/+16I would rather be free, and have the ability to control my own destiny than live on my knees as a slave.
- inactive, on 11/11/2008, -2/+16Do you realize that the bailout money is only a fraction of the money that would be needed to resolve the subprime mortgage crisis? Or that there is no way it will change anything for the good because the money was printed up and worthless, and that you can't compel irresponsible bankers to change their ways by rescuing them from the consequences of their actions? It's laughable that ANYBODY endorsed this package.
- MrGreenGenes, on 11/11/2008, -1/+15I dunno, to me it seemed like Bush and Obama were on the same side for this bailout.
- inactive, on 11/11/2008, -1/+15"when it was announced that it had not passed, stocks rose. immediately upon announcement that it had, they took a large tumble"
Incredible how that got overlooked by the TV news. - StingingNettle, on 11/11/2008, -5/+18"How would one argue that it should flip the global stock market slump in 1 day? im all ears."
It won't flip it. That's the point. It will just pro-long the decline, and pass the problem off to people who don't deserve it by means of inflation. Why would you listen to the same people in government and the media who said everything was fine up until September? I'm also all ears. - Dumbledorito, on 11/11/2008, -2/+14Welcome to why tax cuts for businesses don't stimulate hiring or production: Unless there is demand for your service, be it banking or buying crap, a service provider will not use any incoming funds to hire people or make more goods. The consumer won't spend because he's broke as well, and now the bailout just made things worse.
- MrGreenGenes, on 11/11/2008, -3/+15Ah yes, the classic, "People I don't agree with should be killed", argument.
- raffles116, on 11/11/2008, -2/+14The reason for the bailout was to stop these institutions from going bankrupt, plain and simple. So far that has worked. And the reason for keeping them from going bankrupt is to avoid a massive financial crisis. It was never intended to avert a recession.
Doesn't mean I'm all that hot on the bailout, though... - ramilehti, on 11/11/2008, -0/+12SOL
- DarthVivi, on 11/11/2008, -1/+13Perhaps you didn't see Obama's first press conference last week? He showed full-fledged support for bailing out the "Big Three" auto companies, and wants to see a $50 billion bailout implemented before he even takes office. Bush has supported recent bailouts and is largely responsible for them, but the point is Obama is going to follow Bush's path and continue to support bailouts. Many investors understand this is a problem, and that is one reason why the stock market is going down. The market is not based solely on the present state; expectations of the future also affect it.
- UselessTrivia, on 11/11/2008, -4/+16McCain was for the bailout too, jackass.
- musntSurfatWork, on 11/11/2008, -6/+17these must be the same people that put more quarters into the Coke Machines when they had the 2 previous ones stuck. Except now everyone is all of a sudden afraid to give the vending machine a good kicking.
- inactive, on 11/11/2008, -1/+12It is not the answer for you or I cafferell. You know it's their answer and always has been. You know as well as I do with what they've done there is no other answer they can offer now. They create the tension before they sell you the solution.
- inactive, on 11/11/2008, -0/+11Failout.
- inactive, on 11/11/2008, -0/+11Larry Moe and Curly at the top of the food chain.
http://www.chuckypita.com/the-worlds-greatest-scam ... - inactive, on 11/11/2008, -0/+11OK. Sorry, I guess I'm pretty dumb sometimes. I thought you were serious.
Things may be a little different this time Shylock. We don't have the money for war without outside finance.
Can we get that money?
Who do we go to war against that will require the level of production to make the scheme work? Who would loan us the money for war?
I think that war isn't possible right now, even with Zbig plotting for world domination in Obama's basement.
Instead, the coming finance meetings will re-order the world's monetary systems and we will basically be forced into giving up a good portion of our sovereignty. Our world hegemony has run its course. A powerful military is useless if you don't have the money to run it. - inactive, on 11/11/2008, -0/+10You're assuming the banks would actually loan the money...
- throop77, on 11/11/2008, -3/+13Henry Paulson is the former CEO of Goldman Sachs and he has $600 million in stock options which will be worth nothing if Goldman fails. Why give AIG by far the most bailout money? So they could payback Goldman Sachs. Why let Lehman fail? They are a competitor of Goldman Sachs. Why not force banks to lend the money by writing that requirement into bailout deal? So Goldman and other banks can use the money to become huge banking monopolies. Oh, and the treasury official responsible for administering the bailout fund? Neel Kashkari, former vice-president of Goldman Sachs. No doubt he also has large amounts of money riding on the success of Goldman Sachs. Now I'm not saying they aren't also trying to save the economy, but, that sure is a big conflict of interest, at the very least.
- groo68, on 11/11/2008, -4/+14People need a new phone every year, as well as a new car every 5 years, because companies get away with making their phones die after 2 years or their cars fall apart after the warranty is up. They can make a car that lasts 50 years but that's no where near as profitable as one that breaks down every 5 to 10.
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