Why the bailout will be a disaster

[Craig234]

Originally posted by: Evan Lieb

Originally posted by: Craig234
Independant economists have strongly attacked the bailout plan and suggested alternative plans the Congress did not consider.

I have not seen any of the Wall Street posters here who have so strongly defended thae bailout, answer why those alternatives are not a better choice.

They have only made the case for doing *something*. As far as we can tell, the Congress did the corrupt plan and not the better alternatives. I'd like to see them address that more.

You'd have to be more specific. From what I've read on the bailout, the corrupt part was merely the pork additions (all $110B), which is standard practice (and sadly, practical) in U.S. politics these days.

I am *not* referring to the $110B of pork which is also a problem.

I wasn't more specific because I'm not asking about one of the alternatives, but whatever the best one is which is a matter of opinion - about any of the alternatives suggested.

For example, opponents of the bill did hold unofficial get experts suggesting alternative plans - the plans discussed there would be a good example.

Typically they were plans to put the money elsewhere like local banks, or to let the mortgage holder reduce the mortgage to the 'market value' of the mortgage.

Another suggestion was for the taxpayers to get more of a stake for their money, somewhat like Warren Buffet did for his money.

The refrain was consistently that giving the money to the financial companies who were in the middle of causing this was a problem.

The suspicion that has not been disproven is that the Paulson plan is a corrupt plan based on his loyalties to Wall Street and in particular his former company Goldman Sachs.

Indeed, his decisions to not bail out Lehman Brothers got rid of a GS competitor, while the bailout of AIG saved GS $20B, and the current chairman was sitting with Paulson when he made the AIG decision. There's been little to suggest that this guy with a few months left in 'public office' is not highly incented to use taxpayer money to help his cronies, and is being allowed to do so by a Congress serving the financial industry, and for the 'stragglers' who switched their vote, the recipients of the pork you mentioned.

Interestingly, BBC's newsnight this weekend was discussing also how the 'Mexico bailout' under Clintn was really a bailout of Wall Street firms who had made bad investments there.

So, for the Wall Street supporters of the bailout here, why was it better than any of the alternative uses of the $700B?

 

[shira]

Originally posted by: Dissipate

Liquidity is in Eye of the Holder
For example, take a $500,000 adjustable rate mortgage on a condo in Las Vegas that has a current value of only $250,000. To assume that this asset can be safely held to maturity is absurd, when in all likelihood the borrower will default shortly after the rate re-sets, even if the borrower has not yet shown signs of distress. Of course such a mortgage would be completely illiquid if one tried to sell it anywhere near par, but would be extremely liquid if priced to reflect a more realistic value; say 35 cents on the dollar. But if the government pays prices that fairly factors in likely defaults, it will bankrupt the very institutions it is trying to bail out.

This example by Schiff is absurd on its face. A $500,000 first mortgage presumably was secured by a property worth at least $500,000 at the time of sale. Schiff says that 35 cents on the dollar is what the mortgage might be worth now. But that assumes that the value of this Las Vegas condo has declined by at least 65%! That's ridiculous! Maybe declines have been 40% in SOME markets - with the average at 20 to 25%. That means that the average mortgage is worth at least 75 cents on the dollar, not 35 cents - and this figure assumes that every single mortgage was obtained when the market was at its peak.

Most mortgages were NOT opened at the peak of the market. Most were opened with the market on the way up. Thus, if a homeowner purchased a property with a value, say, 10% below the peak, the net decrease in the value of the property would be only about 10% to 15% or so. Any many, many properties are worth much MORE than the value of the mortgage. My own mortgage is currently about 10% LTV (90% equity). Almost everyone who "bought up" during the increase of the market has substantial equity in their homes. Thus, almost certainly the vast majority of mortgages are NOT under water. That is, the mortgages are totally safe.

I think Schiff's analysis is idiotic.

Someone please explain what I'm missing here.

 

[Wreckem]

Originally posted by: ironwing

Originally posted by: bozack

Originally posted by: Dissipate
Peter Schiff explains in simple terms why the bailout will be a disaster. Distressed homeowners are going to milk this bailout for everything they can get and the cost to the economy will be enormous. A downgrading of U.S. treasury bonds could be in the pipeline given the fact that the federal government has now become the lender of last resort for everyone.

The same homeowners who knowingly and willingly borrowed well beyond their means to afford houses way out of their price range...shocking that they would consider taking advantage of anything.

Then you'll be thrilled to learn that these homeowners don't get squat out of the bailout. However the greedy bankers that made these incredibly stupid loans and then spun towers of shimmering glass on top of these loans will walk away with billions.

 

[Wreckem]

Originally posted by: ironwing

Originally posted by: bozack

Originally posted by: Dissipate
Peter Schiff explains in simple terms why the bailout will be a disaster. Distressed homeowners are going to milk this bailout for everything they can get and the cost to the economy will be enormous. A downgrading of U.S. treasury bonds could be in the pipeline given the fact that the federal government has now become the lender of last resort for everyone.

The same homeowners who knowingly and willingly borrowed well beyond their means to afford houses way out of their price range...shocking that they would consider taking advantage of anything.

Then you'll be thrilled to learn that these homeowners don't get squat out of the bailout. However the greedy bankers that made these incredibly stupid loans and then spun towers of shimmering glass on top of these loans will walk away with billions.

Except for the fact that the Dems have already said the first thing they will do in the 111th Congress will be to help struggling homeowners.

Not only that, any asset the govt buys that is a private mortgage the feds will be more lienient on homeowners as per the bail out bill.

 

[bozack]

Originally posted by: ironwing
I guess I don't understand the logic of heaping blame on one party to a transaction that was clearly stupid but then giving the other party a free ride. Particularly in an asymmetric relationship like a mortgage where the bank wrote the contract, understood the legal meaning of each clause, had the credit info, knew the game inside out, and still made the stupid loan.

I was commenting on the bolded part alone, however I agree, they shouldn't have done anything and let both parties (Lenders and Lendees) feel the burn of their mistakes.

 

[LegendKiller]

Originally posted by: SleepWalkerX

Originally posted by: ericlp
well, it will be interesting 'Monday' to see what the market does. I think it will rally. That may be a good time to get out.

Just a little tip for everyone here.

Who knows? I'd like to see what happens on Monday. But so far its been an epic fail

Hey man. Are we entering inflation, err....deflation...err dollar errr...falling...err...rallying....errr...

Ohhh, what book did you read this week that sets your tone? So far all of your prognostications have been wrong and you flip flop more than McCain.

 

[LegendKiller]

Originally posted by: shira

Originally posted by: Dissipate

Liquidity is in Eye of the Holder
For example, take a $500,000 adjustable rate mortgage on a condo in Las Vegas that has a current value of only $250,000. To assume that this asset can be safely held to maturity is absurd, when in all likelihood the borrower will default shortly after the rate re-sets, even if the borrower has not yet shown signs of distress. Of course such a mortgage would be completely illiquid if one tried to sell it anywhere near par, but would be extremely liquid if priced to reflect a more realistic value; say 35 cents on the dollar. But if the government pays prices that fairly factors in likely defaults, it will bankrupt the very institutions it is trying to bail out.

This example by Schiff is absurd on its face. A $500,000 first mortgage presumably was secured by a property worth at least $500,000 at the time of sale. Schiff says that 35 cents on the dollar is what the mortgage might be worth now. But that assumes that the value of this Las Vegas condo has declined by at least 65%! That's ridiculous! Maybe declines have been 40% in SOME markets - with the average at 20 to 25%. That means that the average mortgage is worth at least 75 cents on the dollar, not 35 cents - and this figure assumes that every single mortgage was obtained when the market was at its peak.

Most mortgages were NOT opened at the peak of the market. Most were opened with the market on the way up. Thus, if a homeowner purchased a property with a value, say, 10% below the peak, the net decrease in the value of the property would be only about 10% to 15% or so. Any many, many properties are worth much MORE than the value of the mortgage. My own mortgage is currently about 10% LTV (90% equity). Almost everyone who "bought up" during the increase of the market has substantial equity in their homes. Thus, almost certainly the vast majority of mortgages are NOT under water. That is, the mortgages are totally safe.

I think Schiff's analysis is idiotic.

Someone please explain what I'm missing here.

Correct. People don't even analyze the situation realistically.

 

[Moonbeam]

What if all the money being made by creative instruments invented around rising property values had been prevented by regulation and capital was incentivized to find profits only in value created by technical inventiveness and productive American businesses instead.

Greed will blindly make a profit anywhere but I should thing that prudence and wisdom would chose to create value based on something real.

Schiff seemed to me to be making that point in the video.

 

[Michael]

I agree that the the analysis in the OP is too simple, but the people dismissing it are also over simplifying. The government is not buying plain vanilla mortgages, they are buying derivitives. Because of the leverage in the derivitives, a 20% decline in the underlying asset values could easily wipe out the entire instrument.

Part of the reason that the market is "illiquid" is that there are few institutions that can analyze and buy those types of instruments and many of the ones that can have failed or are in dire straits.

Michael

 

[SleepWalkerX]

Originally posted by: LegendKiller

Originally posted by: SleepWalkerX

Originally posted by: ericlp
well, it will be interesting 'Monday' to see what the market does. I think it will rally. That may be a good time to get out.

Just a little tip for everyone here.

Who knows? I'd like to see what happens on Monday. But so far its been an epic fail

Hey man. Are we entering inflation, err....deflation...err dollar errr...falling...err...rallying....errr...

Ohhh, what book did you read this week that sets your tone? So far all of your prognostications have been wrong and you flip flop more than McCain.

We are experiencing deflation because housing prices are crashing to reflect real supply and demand, not speculation (and the fact is, we're oversupplied). We are experiencing inflation because the Fed is loaning out more money in return for garbage collateral. The question is not whether we are experiencing one or the other, but rather how much of each are we experiencing.

edit: Of course these are by no means the only sources of inflation and deflation, but (I hope..) you get the idea.

 

[piasabird]

If the value of the dollar keeps going down the whole economy will collapse anyway.

In the long run everyone will be sorry we just threw 700 billion in the trash can.

 

[LegendKiller]

Originally posted by: piasabird
If the value of the dollar keeps going down the whole economy will collapse anyway.

Yeah, dammit. It just keeps going Down.

 

[LegendKiller]

Originally posted by: SleepWalkerX

Originally posted by: LegendKiller

Originally posted by: SleepWalkerX

Originally posted by: ericlp
well, it will be interesting 'Monday' to see what the market does. I think it will rally. That may be a good time to get out.

Just a little tip for everyone here.

Who knows? I'd like to see what happens on Monday. But so far its been an epic fail

Hey man. Are we entering inflation, err....deflation...err dollar errr...falling...err...rallying....errr...

Ohhh, what book did you read this week that sets your tone? So far all of your prognostications have been wrong and you flip flop more than McCain.

We are experiencing deflation because housing prices are crashing to reflect real supply and demand, not speculation (and the fact is, we're oversupplied). We are experiencing inflation because the Fed is loaning out more money in return for garbage collateral. The question is not whether we are experiencing one or the other, but rather how much of each are we experiencing.

edit: Of course these are by no means the only sources of inflation and deflation, but (I hope..) you get the idea.

Ohhh, now it's just housing prices eh? What about commodities crashing? I thought those were going to keep going through the roof? What about credit contracting?

Wait, I thought we'd experience *only* inflation because of the Fed? Why the switch?

Is this a little more complicated than you initially thought?

 

[SleepWalkerX]

Originally posted by: LegendKiller

Originally posted by: SleepWalkerX

Originally posted by: LegendKiller

Originally posted by: SleepWalkerX

Originally posted by: ericlp
well, it will be interesting 'Monday' to see what the market does. I think it will rally. That may be a good time to get out.

Just a little tip for everyone here.

Who knows? I'd like to see what happens on Monday. But so far its been an epic fail

Hey man. Are we entering inflation, err....deflation...err dollar errr...falling...err...rallying....errr...

Ohhh, what book did you read this week that sets your tone? So far all of your prognostications have been wrong and you flip flop more than McCain.

We are experiencing deflation because housing prices are crashing to reflect real supply and demand, not speculation (and the fact is, we're oversupplied). We are experiencing inflation because the Fed is loaning out more money in return for garbage collateral. The question is not whether we are experiencing one or the other, but rather how much of each are we experiencing.

edit: Of course these are by no means the only sources of inflation and deflation, but (I hope..) you get the idea.

Ohhh, now it's just housing prices eh? What about commodities crashing? I thought those were going to keep going through the roof? What about credit contracting?

Wait, I thought we'd experience *only* inflation because of the Fed? Why the switch?

Is this a little more complicated than you initially thought?

These actions are not the cause of the crisis. They are the symptoms of the crisis. When I say we are experiencing deflation because housing prices are crashing what I mean to say is the proof that we are experiencing deflation can be viewed by looking at crashing housing prices. The cause of crashing housing prices are the result of the speculative rise in housing prices which is the result of the Fed printing too much money and when they targeted housing.

Inflation and deflation are monetary phenomenons. Basically we are experiencing the level of deflation equal to the level of inflation introduced in 2001-2003 (we're going to experience at least the same level of deflation if not more due to any other monetary invervention, like the Nasdaq bubble. I don't think we fully deflated from that.). But yet, we are trying to inflate again.

One thing I'll throw out there, which I constantly stress time and time again, I'm not an economic expert but here's what I am seeing. Take it however you like.

 

[Fern]

I firmly oppose the bail-out bill, but I think some of what the author says is arguable.

For example:

The government?s assumptions about the ?held to maturity? value of these mortgages completely understate the likelihood of widespread default. Some of the ?illiquid? assets represent tranches of mortgage-backed securities that will be completely wiped out. Even the higher quality tranches will suffer severe losses due to mortgages that will inevitably go bad.

^ The national foreclosure rate is only about 1% (1.033% at around the 1st quarter of this year IIRC); and forclosed properties aren't woth -$0-.

For the author's doomsday senario ( as per above) to be true, we'd have to have MUCH higher forclosure rates.

IMO, the problem is really one of irrationality in the market (i.e., "fear"). I think this irrationality is driven by fear of the *inknowns*, we need to resolve the outstanding questions about the pools of mortgages, and devise a system from now-on-out that provides good data easily obtained on such MBS's and their underlying assests (home mortgages).

Also missing in the discussion is the concept of the time value of money. Even if a substantial percentage of the $700 billion is eventually recovered, it will still represent a huge loss for taxpayers who theoretically have to come up with the cash today to buy the mortgages

^ The interest rate on mortgages is much higher than what one can get on treasuries or CD's. I.e., these should be considered high-yield investments; the yield is higher than what the Treasury pays to borrow. That's a good thing.

In addition to the government bailout, distressed lenders are looking to the suspension of ?mark to market? accounting rules as a means of salvation. These rules require institutions to value their mortgage assets according to the most recently traded price. However, suspending these rules will not make the losses go away. Rather it will simply allow lenders to pretend that the losses do not exist.

The rules need to be tweaked. If there is an (irrational) illiquid market, the securites will be under-valued leading to distortions on financial statements. These *false* losses, and resulting *weak-looking* Balance Sheets will unfairly hammer companies, making them look far worse than they actually are.

If the underlying assets (in this case home mortgages) are fairly strong (again, the national forclosure rate is only about 1%) and homes have devalued nationally by only a few % points, drasticly writing down the value of the MBS's makes no good sense.

Fern

 

[Drift3r]

Originally posted by: ironwing

Originally posted by: bozack

Originally posted by: ironwing
Then you'll be thrilled to learn that these homeowners don't get squat out of the bailout. However the greedy bankers that made these incredibly stupid loans and then spun towers of shimmering glass on top of these loans will walk away with billions.

Caveat Emptor....

Lets get one thing straight, I personally feel this bailout is bullshit, but I have less of a problem with predatory lending than I do with pure stupidity.

People were either too dumb to know better, or even worse they knew better and still jumped on board hoping and gambling that everything would eventually work out...well it didn't.

I guess I don't understand the logic of heaping blame on one party to a transaction that was clearly stupid but then giving the other party a free ride. Particularly in an asymmetric relationship like a mortgage where the bank wrote the contract, understood the legal meaning of each clause, had the credit info, knew the game inside out, and still made the stupid loan.

That's because he is being obtuse and doesn't care to be honest. He could care less that the banking industry itself created the situation by pushing for the removal of banking regulations which setup this perfect storm of failure. He much rather blame the little guy because it requires less work to do so then to actually figure out how the banking industry fleeced the US tax payer.

 

[imported_K3N]

Biden, Obama, and McCain all voted for this bill

Stop believing in the two party system folks
http://www.youtube.com/watch?v=fTahZE4q90U

Congress was threatened with martial law
http://www.youtube.com/watch?v=HaG9d_4zij8

 

[First]

Originally posted by: Craig234

Originally posted by: Evan Lieb

Originally posted by: Craig234
Independant economists have strongly attacked the bailout plan and suggested alternative plans the Congress did not consider.

I have not seen any of the Wall Street posters here who have so strongly defended thae bailout, answer why those alternatives are not a better choice.

They have only made the case for doing *something*. As far as we can tell, the Congress did the corrupt plan and not the better alternatives. I'd like to see them address that more.

You'd have to be more specific. From what I've read on the bailout, the corrupt part was merely the pork additions (all $110B), which is standard practice (and sadly, practical) in U.S. politics these days.

I am *not* referring to the $110B of pork which is also a problem.

I wasn't more specific because I'm not asking about one of the alternatives, but whatever the best one is which is a matter of opinion - about any of the alternatives suggested.

For example, opponents of the bill did hold unofficial get experts suggesting alternative plans - the plans discussed there would be a good example.

Typically they were plans to put the money elsewhere like local banks, or to let the mortgage holder reduce the mortgage to the 'market value' of the mortgage.

Another suggestion was for the taxpayers to get more of a stake for their money, somewhat like Warren Buffet did for his money.

The refrain was consistently that giving the money to the financial companies who were in the middle of causing this was a problem.

The suspicion that has not been disproven is that the Paulson plan is a corrupt plan based on his loyalties to Wall Street and in particular his former company Goldman Sachs.

Indeed, his decisions to not bail out Lehman Brothers got rid of a GS competitor, while the bailout of AIG saved GS $20B, and the current chairman was sitting with Paulson when he made the AIG decision. There's been little to suggest that this guy with a few months left in 'public office' is not highly incented to use taxpayer money to help his cronies, and is being allowed to do so by a Congress serving the financial industry, and for the 'stragglers' who switched their vote, the recipients of the pork you mentioned.

Interestingly, BBC's newsnight this weekend was discussing also how the 'Mexico bailout' under Clintn was really a bailout of Wall Street firms who had made bad investments there.

So, for the Wall Street supporters of the bailout here, why was it better than any of the alternative uses of the $700B?

I don't think you have any clue what you're talking about here. Your suggestion to let mortgage holders voluntarily reduce their mortgages is nonsensical; the whole idea behind the bailout is to give the power to the Fed to buy up these securities at higher than the mark-to-market values (i.e. the values that were already set in the market). So unless something changed drastically with the House bill passed on Friday, that's what this is all about and letting mortgage holders do it themselves does not change the net effect of the burden on taxpayers because someone (taxpayers!) still are going to end up paying for it unless you want to see banks pay for it and then go under in droves.

And how on earth are the taxpayers supposed to get more for their money if banks are simply allowed to go under because they're not at the minimum level of capitalization? How are taxpayers going to benefit from being unemployed when businesses can't get large loans to expand their production? As everyone has been saying (and no, there are not a large contingent of alternative plans by economists), the alternative to the gov't bailout is worse.

 

[chess9]

http://abcnews.go.com/Technolo...tory?id=5949305&page=1

Chaos Theory and the Bailout. A very interesting read by a Professor of Mathematics from Temple. He opines by inference on Palin as well as our Congress.

-Robert

 

[Craig234]

Originally posted by: K3N
Biden, Obama, and McCain all voted for this bill

Stop believing in the two party system folks
http://www.youtube.com/watch?v=fTahZE4q90U

Congress was threatened with martial law
http://www.youtube.com/watch?v=HaG9d_4zij8

The people I support, the progressive democrats - like Kucinich and Stark - voted against the bill both before and after the pork was added.

I'm not discussing whether the vote was right here, but rather that I'm glad to see the people I support not change their vote because pork was added.

 

[Craig234]

Originally posted by: Evan Lieb

Originally posted by: Craig234

Originally posted by: Evan Lieb

Originally posted by: Craig234
Independant economists have strongly attacked the bailout plan and suggested alternative plans the Congress did not consider.

I have not seen any of the Wall Street posters here who have so strongly defended thae bailout, answer why those alternatives are not a better choice.

They have only made the case for doing *something*. As far as we can tell, the Congress did the corrupt plan and not the better alternatives. I'd like to see them address that more.

You'd have to be more specific. From what I've read on the bailout, the corrupt part was merely the pork additions (all $110B), which is standard practice (and sadly, practical) in U.S. politics these days.

I am *not* referring to the $110B of pork which is also a problem.

I wasn't more specific because I'm not asking about one of the alternatives, but whatever the best one is which is a matter of opinion - about any of the alternatives suggested.

For example, opponents of the bill did hold unofficial get experts suggesting alternative plans - the plans discussed there would be a good example.

Typically they were plans to put the money elsewhere like local banks, or to let the mortgage holder reduce the mortgage to the 'market value' of the mortgage.

Another suggestion was for the taxpayers to get more of a stake for their money, somewhat like Warren Buffet did for his money.

The refrain was consistently that giving the money to the financial companies who were in the middle of causing this was a problem.

The suspicion that has not been disproven is that the Paulson plan is a corrupt plan based on his loyalties to Wall Street and in particular his former company Goldman Sachs.

Indeed, his decisions to not bail out Lehman Brothers got rid of a GS competitor, while the bailout of AIG saved GS $20B, and the current chairman was sitting with Paulson when he made the AIG decision. There's been little to suggest that this guy with a few months left in 'public office' is not highly incented to use taxpayer money to help his cronies, and is being allowed to do so by a Congress serving the financial industry, and for the 'stragglers' who switched their vote, the recipients of the pork you mentioned.

Interestingly, BBC's newsnight this weekend was discussing also how the 'Mexico bailout' under Clintn was really a bailout of Wall Street firms who had made bad investments there.

So, for the Wall Street supporters of the bailout here, why was it better than any of the alternative uses of the $700B?

I don't think you have any clue what you're talking about here. Your suggestion to let mortgage holders voluntarily reduce their mortgages is nonsensical; the whole idea behind the bailout is to give the power to the Fed to buy up these securities at higher than the mark-to-market values (i.e. the values that were already set in the market). So unless something changed drastically with the House bill passed on Friday, that's what this is all about and letting mortgage holders do it themselves does not change the net effect of the burden on taxpayers because someone (taxpayers!) still are going to end up paying for it unless you want to see banks pay for it and then go under in droves.

And how on earth are the taxpayers supposed to get more for their money if banks are simply allowed to go under because they're not at the minimum level of capitalization? How are taxpayers going to benefit from being unemployed when businesses can't get large loans to expand their production? As everyone has been saying (and no, there are not a large contingent of alternative plans by economists), the alternative to the gov't bailout is worse.

You don't sound very informed at all about the alternative plans yourself. While you sort of take pot shots here and there, you sound like you're hearing about them for the first time, and not listening too carefully - for example, you say "how on earth are the taxpayers supposed to get more for their money if banks are simply allowed to go under because they're not at the minimum level of capitalization?" The plan there was to prevent their going under with government capitalization, but the taxpayers gaiining more benefits.

I'm looking for commentary by people who are defending the Paulson bailout and who are informed about the alternatives to discuss them.

 

[First]

Originally posted by: Craig234

You don't sound very informed at all about the alternative plans yourself. While you sort of take pot shots here and there, you sound like you're hearing about them for the first time, and not listening too carefully - for example, you say "how on earth are the taxpayers supposed to get more for their money if banks are simply allowed to go under because they're not at the minimum level of capitalization?" The plan there was to prevent their going under with government capitalization, but the taxpayers gaiining more benefits.

And how on earth are taxpayers going to gain direct benefits without the gov't bailing out the banks? Do you have any understanding of the type of the levels of capitalization banks are required to be at (by law) and that, if they can't reach that level, they are then not allowed to take any further deposits, meaning that in many cases these banks will go under? You're separating concepts that are inherenetly inter-linked. Bailing out banks is a way of bailing out taxpayers because taxpayers will end up losing their jobs and investments if banks aren't bailed out by the gov't. I haven't heard a single solitary superior alternative, and you certainly haven't provided any example here.

I'm looking for commentary by people who are defending the Paulson bailout and who are informed about the alternatives to discuss them.

In which case you shouldn't be discussing this since you have no concept of what is going on here.

 

[Craig234]

Originally posted by: Evan Lieb

Originally posted by: Craig234

You don't sound very informed at all about the alternative plans yourself. While you sort of take pot shots here and there, you sound like you're hearing about them for the first time, and not listening too carefully - for example, you say "how on earth are the taxpayers supposed to get more for their money if banks are simply allowed to go under because they're not at the minimum level of capitalization?" The plan there was to prevent their going under with government capitalization, but the taxpayers gaiining more benefits.

And how on earth are taxpayers going to gain direct benefits without the gov't bailing out the banks? Do you have any understanding of the type of the levels of capitalization banks are required to be at (by law) and that, if they can't reach that level, they are then not allowed to take any further deposits, meaning that in many cases these banks will go under? You're separating concepts that are inherenetly inter-linked. Bailing out banks is a way of bailing out taxpayers because taxpayers will end up losing their jobs and investments if banks aren't bailed out by the gov't. I haven't heard a single solitary superior alternative, and you certainly haven't provided any example here.

I'm looking for commentary by people who are defending the Paulson bailout and who are informed about the alternatives to discuss them.

In which case you shouldn't be discussing this since you have no concept of what is going on here.

No, you are not comprehending what I've said twice now, that it's two different alternatives,
one to re-direct the funding, and the *other* to get the taxpayer more equity in the firms being bailed out if the bailout capitilization is doen more directly to the firms. Your entire statements rests on you conflacting those two as the same plan, both not re-capitalizing the firms directly, *and* getting the taxpayer more equity in the firms, when that's never been said in my posts.

 

[First]

Originally posted by: Craig234

Originally posted by: Evan Lieb

Originally posted by: Craig234

You don't sound very informed at all about the alternative plans yourself. While you sort of take pot shots here and there, you sound like you're hearing about them for the first time, and not listening too carefully - for example, you say "how on earth are the taxpayers supposed to get more for their money if banks are simply allowed to go under because they're not at the minimum level of capitalization?" The plan there was to prevent their going under with government capitalization, but the taxpayers gaiining more benefits.

And how on earth are taxpayers going to gain direct benefits without the gov't bailing out the banks? Do you have any understanding of the type of the levels of capitalization banks are required to be at (by law) and that, if they can't reach that level, they are then not allowed to take any further deposits, meaning that in many cases these banks will go under? You're separating concepts that are inherenetly inter-linked. Bailing out banks is a way of bailing out taxpayers because taxpayers will end up losing their jobs and investments if banks aren't bailed out by the gov't. I haven't heard a single solitary superior alternative, and you certainly haven't provided any example here.

I'm looking for commentary by people who are defending the Paulson bailout and who are informed about the alternatives to discuss them.

In which case you shouldn't be discussing this since you have no concept of what is going on here.

No, you are not comprehending what I've said twice now, that it's two different alternatives,
one to re-direct the funding, and the *other* to get the taxpayer more equity in the firms being bailed out if the bailout capitilization is doen more directly to the firms. Your entire statements rests on you conflacting those two as the same plan, both not re-capitalizing the firms directly, *and* getting the taxpayer more equity in the firms, when that's never been said in my posts.

Your comments just don't make any sense and you simply cannot explain otherwise.

 

[Budarow]

So...what are you peeps doing with your retirement accounts these days? Pretty scary stuff for anyone over 40 who has less than $10M in investments (i.e., even if you lose 80%, you can still live pretty well on $2M).

Guess I'll short the market for a while and switch to buying gold after the U.S. dollar stops appreciating against the Euro (getting ready for the rising U.S. debt and interest rates and the looming chance for the U.S. to default).

Any other good investments ideas other than the above. No "buy and hold" for me though, I've never been a firm believer in it (at least not in the last 15 years which is when I started to invest).