Wall street bailout plan defeated in the House.

[August]

Originally Posted by Stealth Hunter

We're doomed, aren't we?

You are such a negative nancy SH. Fear not. We have survived worse times and we'll survive this one too.

[UnderseaLcpl]

Originally Posted by goldorak

I meant directly linked to commercial output in general. And that comprises also industrial production. But nowadays most financial istitutions push products which in no way are linked to real goods or services. Speculative products whose values are arbitrary. They are totally separated from the real economy and they are one of the reasons of this crisis.

I wouldn't ban speculation without some very convincing evidence. Speculation really gets a bum rap when it is actually a very productive force. What it should be called is "Futures Investment". Admittedly, the system is very complex, but basically it all comes down to buying something (a commodity, a part of a business, a product) before the market has a chance to establish the real price. This generates immediate income for businesses to reinvest.

Where the system falls down is in government. Complex finance laws make some of these trading practices illegal for people like you or me. Sometimes they require expensive licensures. Capital gains taxes are not equally applied amongst the rich and rest of us. I don't know about you, but I can't afford to hire a lawyer that can set up a safe channel for my capital gains to go into a Swiss bank tax-free. Everytime I trade, I am taxed, so my flexibility is limited, and so is my competitive ability in the futures market.

Also, any removal of speculative trading would put the U.S. at a huge competitive disadvantage, just in terms of investment capital alone.

As great as that would be I don't think we will ever go back to gold standard.

But if you had fiat powers, you would do it right?

Yes the issue is always how much does the government intervene in markets.
Let me start by saying that I'm contrary to government coming to the rescue of institutions that brought their own downfall (and here in italy we have a great example of that, our government has been financing our Alitalia air company for over a decade, a company that was completely broke, losing 2 million € per day).

Agreed. The U.S. Government has also been guilty of bailing out corporations other than banks. It never ends well. It generates spikes of inflation and discourages competition as companies that should have fallen and broken into pieces are allowed to survive and maintain a significant market presence whether the consumer wants them or not. Unsustainable business models that are allowed to exist by the state are bad for everyone in the long run.

The point is that government has a responsability towards society to regulate markets, establish a series of checks, controls, and in general a supervising authority that can take action against Corporations/financial istitutions that don't play by the rules. But rules must be made, and regulatory bodies are not to be controlled by those it is supposed to control and supervise.

Well, that's the real trick isn't it.
Problem is, government is badly in need of some kind of regulation as well.

My favored method is constitutional law. The U.S. Constitution is a decent way of regulating government, except that it has been badly eroded by "interpretation"
Things over here aren't going to change much until they get so bad that there is some kind of major upheaval and a new constitution is written, hopefully by freedom-minded individuals.

A strong and limiting constitution can force the state to adhere only to its' assigned roles, and those roles need to focus on creating a fair trading environment. Without fraud, state subsidies, over-regulation, corporate taxation, property taxation, and inflationary problems caused by state overspending, competition wins out. Competition for jobs and consumers and products, and competition is what makes a powerful economy.

Of course, even if we did have such a constitution, it would eventually be eroded like the one we have now, I just think it would take a lot longer.

[Onkel Neal]

Who wants to bet a similar version of the bill will be passed in the next 10 days?

The market dropped 777 points, largest evah.

[August]

Originally Posted by Neal Stevens

Who wants to bet a similar version of the bill will be passed in the next 10 days?

The market dropped 777 points, largest evah.

You're probably right but I hope not.

[UnderseaLcpl]

Originally Posted by Neal Stevens

Who wants to bet a similar version of the bill will be passed in the next 10 days?

The market dropped 777 points, largest evah.

Or sometime in the not-so-diatant future. Followed an indeterminate time later by another bailout package

Of course, even if this works, they'll just find another statism-rampant sector of the economy to build a bubble in. Agriculture is looking good for now, with a history of subsidy and the ethanol-driven price surge......

[August]

Interesting article from CNN (of all places)

http://www.cnn.com/2008/POLITICS/09/29/miron.bailout/

CAMBRIDGE, Massachusetts (CNN) -- Congress has balked at the Bush administration's proposed $700 billion bailout of Wall Street. Under this plan, the Treasury would have bought the "troubled assets" of financial institutions in an attempt to avoid economic meltdown. This bailout was a terrible idea. Here's why.
The current mess would never have occurred in the absence of ill-conceived federal policies. The federal government chartered Fannie Mae in 1938 and Freddie Mac in 1970; these two mortgage lending institutions are at the center of the crisis. The government implicitly promised these institutions that it would make good on their debts, so Fannie and Freddie took on huge amounts of excessive risk.
Worse, beginning in 1977 and even more in the 1990s and the early part of this century, Congress pushed mortgage lenders and Fannie/Freddie to expand subprime lending. The industry was happy to oblige, given the implicit promise of federal backing, and subprime lending soared.

[Stealth Hunter]

Originally Posted by August

You are such a negative nancy SH. Fear not. We have survived worse times and we'll survive this one too.

Things change...

[Skybird]

Originally Posted by Neal Stevens

Who wants to bet a similar version of the bill will be passed in the next 10 days?

The market dropped 777 points, largest evah.

The number of the beast, if that doesn't mean something.

No wait, that was a different number.

It seems many republican representatives fear the wrath of their voters. They already predicted on saturday that it would not find a majority - at least this time. But since the elections will not go away, and the ambitions of people stay the same - 50:50, Neal - at least they think a majority of their voters does not support the idea to pay for the banker's mistakes.

[SteamWake]

Originally Posted by Skybird

It seems many republican representatives fear the wrath of their voters.

Both sides of the aisle are scared witless.

One of the things holding up this legislation is posturing to make sure that no one party or indivitual will stand out as the bad guy.

No one it seems is willing to step foward and be a leader.

[August]

I hope the deadlock continues. Read the CNN article i posted above.

[UnderseaLcpl]

Originally Posted by August

I hope the deadlock continues. Read the CNN article i posted above.

Me too, but I don't think it will matter in the end. Public sentiment seems to be against bankers and "lack" of regulation, judging by the media response and the papers here.

The Republicans have offered a glimmer of hope by turning the package down, but I won't count on them defeating future measures until I can access some of the .gov pages I usually use to check up on Congressmen. They're still down right now.

There is a fundamental flaw in public reasoning, exemplified by repeated usage by the media of the phrase "Who will/should run the country?"
Government isn't supposed to run the country, it's supposed to let the country run.

When everything goes to hell in a handbasket, most people look to the State to fix it, even when the state caused the problem in the first place. And who can blame them? We are taught this system from first grade (if you are in a public school);
"We're a Democracy" "We are Empowered" "Your vote counts" blah blah blah......
whatever.
Trusting the State to solve problems is especially dangerous when combined with politics, which is mostly the art of manipulation and/or deflecting blame. The sources of problems are misidentified, and the problem continues, only to be "fixed" again, and resurface again with worse consequences.

I'm not sure what Washington's next move will be. The media has been strongly critical of bailouts (generally under the misconception that the companies are entirely at fault), but the recent nosedive of the DOW and the repurcussions we are seeing worldwide already may spur a knee-jerk response.

Either way, general fiscal policy will probably remain unchanged. Best case scenario; bailout rejected and we ride the recession to a new bubble in some other industry, back to square one.
Worst case; bailout passes and the resulting inflation and public debt makes the next bubble-burst worse.

Without a major policy reversal in State spending we will eventually slide to economic ruin and social chaos.

[August]

Well i certainly don't see the GoP as saviors but it is encouraging that the opposition to the bill is bi-partisan.

[gimpy117]

Shame on all of the companies who did this to us. Those greedy big wigs on Wall Street were careless about their business practices and thought that money grew on trees and that they could ride the bubble and didn't even worry about the pop that has now happened (and now they are riding their golden parachutes away from the burning companies). And then, when it does go down hill, the corporations cry for help bailing their butts out of the fire because they didn't plan well for the future.

Sorry all you companies, but if nobody wants to look into the future and plan for it, I'm not gonna bail you out with my own money. Besides, if I went out right now and got a loan for a big house and didn't think about how I'm gonna pay for it next month and I go broke, people would say I was stupid and I deserved it when I held a fundraiser to save my house. So then why did they expect us to come with open arms and pocketbooks when they did the Wall Street equivalent??

[UnderseaLcpl]

Originally Posted by August

Well i certainly don't see the GoP as saviors but it is encouraging that the opposition to the bill is bi-partisan.

:hmm: :hmm: :hmm: , maybe........

I guess it depends on the reasons for bi-partisan opposition. Hopefully, after I get home from work I can look some of them up. I still don't know who voted for what and why.

I'm generally not fond of bi-partisan initiatives, because I hate to see that kind of solidarity amongst a legislative body, I guess we'll see. Who knows? Maybe there is a major paradigm shift in the works?

Hope springs eternal.

[UnderseaLcpl]

Originally Posted by gimpy117

Shame on all of the companies who did this to us. Those greedy big wigs on Wall Street were careless about their business practices and thought that money grew on trees and that they could ride the bubble and didn't even worry about the pop that has now happened (and now they are riding their golden parachutes away from the burning companies). And then, when it does go down hill, the corporations cry for help bailing their butts out of the fire because they didn't plan well for the future.

Sorry all you companies, but if nobody wants to look into the future and plan for it, I'm not gonna bail you out with my own money. Besides, if I went out right now and got a loan for a big house and didn't think about how I'm gonna pay for it next month and I go broke, people would say I was stupid and I deserved it when I held a fundraiser to save my house. So then why did they expect us to come with open arms and pocketbooks when they did the Wall Street equivalent??

@ August



See? Everyone is eager to blame the market, despite everything the government has done to produce this crisis.