One the one hand we have the stupidest and poorest Americans who bought McMansions by lying on their loan application and now irresponsibly walking away from their homes. On the other hand we have Wall Street and Paulson/Bernanke engaged in unprecedented fear mongering warning of an immanent Great Depression if we don't give Wall Street $700 billion on top of $300 billion already given. And they want this money IMMEDIATELY (no time to consider other plans, no time for debate). The Patriot act was passed in a day with no debate because everyone was shit scared. And that's how "they" are trying to pass this bill - by scaring everyone into an "urgent" bailout - it is pure terrorism.
don't give Wall Street $700 billion ------------------------- Techinically we are not giving them 700b, Wall Street is selling and the gov't is the buyer. I'd read a long time ago, WS doesn't buy anything, they sell things. Should be some high fivin if they pull the sale of the century off.
I was wondering that it is just amazing that this emergency was declared by Bush a month before elections. Sort of like Tom Ridges weekly orange alerts going into last election.
Paulson saying this isn't an expenditure is pure BS. Goverment will be buying mortgage assets at above market value prices. And since RE is still highly overvalued - if it continues going down then there is no way government is going to make any money off of this. Right now we are following the Enron/Japan playbook of taking bad loans off the balance sheet but not really marking them down. Instead we need to follow the Swedish playbook: wipe out shareholders and creditors and force banks to write down assets to the market even if it results in insolvency. THEN infuse capital into a newer cleaner banking system.
While you're technically correct the plain fact of the matter is that the government is buying shit and it's not even in a pie crust. There's no hope of recovering a dime from the purchase of this crap and the public would be lucky if the government is able to recoup enough money to cover the cost of administering this nightmare over the next 10 years.
The most important role the Fed and the government can play is lendor of last resort. Paulson/Bernanke wants the government to act as the highest bidder of shit assets that no sane investor wants.
The OP is correct. It could be a 9/11 style reaction to the financial markets. That is, using a crisis, to force policies onto a scared populace. For the war and everything that came after 9/11 had nothing to do with 9/11. Read this: http://www.amazon.com/Shock-Doctrine-Rise-Disaster-Capitalism/dp/0312427999 It seems like Bush and his mighty band of chicken-hawk thugs are at it, again. But who knows for sure because it's rush, rush, rush... At least, the Rebublicans, his own party, are the ones putting the brakes on this whole thing. I'd like to hear more.
If only it were that straightforward. Have you ever heard of a "toxic" mortgage when the paper is directly attached to the property it was written for? No, Paulson is trying to get us to by mortgage-related assets, derivatives that contain fractions of mortgages. Worse, has anyone stopped to think that all that's going on is largely based on the the subprime part of the mortgages that were underwritten? How much worse do you think it's going to get once the Alt-A and jumbo prime mortgages start to default? Add to that credit card debt and auto loans, both of which were also put into this abyss over over-leveraged derivatives. And then there's all these CDSs that were written and sold to "insure" all this crap. It's time to wipe out all of this derivative crap, break up the MBSs and randomly dole out the mortgages that are still current to the holders of these nightmare inventions.
With all due respect to the victims of 911, all Osama did was cost the country a few billion dollars for a couple of 30 year old buildings. Bush and Cheney with their over reaction to 911 have cost the country trillions of dollars for a useless war.