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Love your moniker.
So, while the proposal in question sucked, if Congress doesn' get "something" out the door you'll continue to see errosion in the global markets. the clock is ticking and for all of those that voted down the bill yesterday, you've just inherited the timebomb and should be held accountable for pushing forth an alternative ASAP!
It's frustrating to watch him use his intellectual and political capital this way, as he does not know what he's talking about here. I wish he had deferred to the experts.
This is the D- correction of a C market that was perceived as a B+ market on Fraternity Row. That's a good thing. A little discomfort, evenly distributed, is about all that's going to happen. The credit freeze will soften but probably not thaw out much for another 6 months. Tightened belts are this winter's fashion.
Once upon a time, in my Depression Era conscious family, personal good times were signaled with pretty wrapping paper for the Christmas presents. In personal tough times, the Christmas presents were carefully wrapped in newspaper. This is a good season to revive that old time, Ma and Pa Kettle practice. Plan to wrap the presents in newspaper this year. Call it Zeitgeist wrapping.
There is a better solution.
http://thesebastards.blogspot.com/
It is for this reason that Obama (a pragmatist through and through) is needed now more than ever.
We survived the S&L crisis. We survived the dot com. We will be fine.
Things go up and down.
I tend to believe more Economists who have studied LONG-TERM trends than my local financial "advisor". Check out some of the leading University professors who are opposed to the plan from yesterday:
http://faculty.chicagogsb.edu/john.cochrane/res...
"To the Speaker of the House of Representatives and the President pro tempore of the Senate:
As economists, we want to express to Congress our great concern for the plan proposed by Treasury Secretary Paulson to deal with the financial crisis. We are well aware of the difficulty of the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function. We see three fatal pitfalls in the currently proposed plan:
1) Its fairness. The plan is a subsidy to investors at taxpayers’ expense. Investors who took risks to earn profits must also bear the losses. Not every business failure carries systemic risk. The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise.
2) Its ambiguity. Neither the mission of the new agency nor its oversight are clear. If taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwards.
3) Its long-term effects. If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, America's dynamic and innovative private capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.
For these reasons we ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come.
After a 777 point drop, if the market DIDNT go up, then it would be a complete disaster. Rich people buy lots of stocks when it crashes, and thats why its up today.
We are still in deep shit. Dont be fooled.
What is the fix? Buying the assets will not change the system... thus the short term infusion of capitol will not fix the underlying problem. A real move towards banking transparency will. Look what the Japanese do to their banks since their big government bail out for an example of a truly transparent banking system -- In fact, how many Japanese banks failed because of this bad paper? Whats that? None? because the government auditors forced them to acknowledge the risk and the value of those sketchy assets.
I for one am glad that republicans stood up and said no to this bail out. Because my democratic party leadership was willing to hand over a trillion dollars... with no real changes to banking regulation at all. WTF? forget about CEO pay and all the other window dressing. Where was the REAL regulatory reform to go along with this money? Because once they have the money, wall street will turn around and spend it on lobbiests in order to prevent the kinds of regulations that need to be done to ensure this doesn't happen again.
If the economy is truly a global economy, lets get the IMF and theWorld to bail out these financial institutions, instead of the US tax payer. Let the World bank buy up this bad paper if its such a "good deal." Perhaps such a bailout from an international organization could enforce the kinds of transparency on the system that our American political system seems unable to put in place.
If you don't believe me, just turn on any financial channel that covers international market. There's a lot of blood in the water but the other countries seem to be pragmatic enough to address the issue rather than take ideological "pure" stances while their entire economy tanks.
Now, I don't think that's happening tomorrow. Because I think the Senate will pass the bill, which will put it off a bit. But if House Democrats start to play games like the House Republicans did, all bets are off.
Does that mean we should care? Not everyone has money in the stock market. True. But if nobody can get loans of any kind, and that's where we are today, the economy will collapse. Soon and brutally.
So, add some bells and whistles, by all means. Take FDIC coverage up to $250,000. Add something else that helps voters without killing the bill. But don't play games.
One thing about the whole Shock Doctrine theory which people are missing right now is that it is morally wrong to behave that way. We don't adopt the tactics, in this case, of the other side. We perform triage, and fix the real problems later. Right now, the Republicans own this disaster. Anyone who thinks we can't come back in January, and get public support for a more progressive package is thinking small. We will win, and win big. And then we will have the credibility to do something special.
Let's not blow it.
I would rather:
1) Re-regulate (bring back FDR's regulation) and oversight.
2) Create a $70 Billion liquidity fund for business loans for businesses that are 3 years old or older that have yearly gross sales revenues of $250,000 to $5,000,000 where they can borrow up to $50K at prime.
3) Invest an immediate $70 Billion into green startups (any new company that wants to enter green technology)
4) start a WPA for $5 billion a month
5) Invest $70 Billion into a national healthcare system that allows anyone without insurance to join Medicare
6) Put in a RTC and do the S&L thing for any banks that fail
7) Increase depositor insurance to $250K to reduce runs at the bank.
For a price tag of 30% of what is being asked I would start to cover the costs and expenses of the middle class. I would start to support the BASE of the pyramid. I would create employment for those that want to work by having a WPA rebuild our infrastructure. I would directly face the cause of most of the BKs and foreclosures (healthcare, as Moore points out) by creating a health care safety net to cover those that need it. I would invest in small business so they can survive the downturn. And of course re-regulate the unregulated so they can't create this mess again while providing a way to catch those that do fail and protect depositors.
Will the markets take a hit? Yes. But by stablizing the base rather than a $750 billion dollar giveaway to the crooks that created the mess, in the long term we will solve the problem, not cover up the symptom.
And for the record, Krugman actually prefers this form of bailout over a capital giveaway.
So let's stop crying like chickens with our head cut off about WMDs in the economy and let the gamblers take their lumps for playing fast and lose in a wild west without rules and oversight, correct the problems that allowed that and protect the people at the bottom.
Let the corporate titans fall, lets take our lumps and lets force America to take a long hard look in the mirror and think about how important it is to pay attention to what their government is doing. What could be more patriotic?
Half this country deserves to loose their jobs and worry about their families because they have been walking around in a bubble for the past 20 years talking about blowjobs, Brittany, banning gay marriage and which politician they want to drink a beer with.
Without pain, this crisis won't seem real to people. It's like a war you only watch on TV. It is easy to forget about sacrifice and change and go right back into old patterns. There is never the political will to make the big needed changes in the system. Without pain, there is just more of the same.
Money in the stock market is NEVER that same as 'money in your pocket'.
For the past 30 years, the reich-wing has moved the definitions of right vs left, so the 'middle point' ends up being far-right. Why do that? So that all the lemmings that 'just want to be safe' or say 'well, I don't know, I just want to be in the middle...' and they end up on the right. Think first! Postiion yourself later, if at all. The value of something is not neccesarily what it's price is...
However, you are wrong, John, on at least one thing. 1) the points made at dKos and other liberal sites is that there are other GREAT or more tried and true alternatives to getting the credit crisis fixed or alleviated that won't hose us in the long run, and by never even asking or consulting or discussing these, there's been serious failure in the House. Second, they aren't saying it's not a crisis, or that the DOW is the sole reason that they feel like we have breathing room to fix this. It's that we MUST take some breathing room to fix this - and fix it right.
We could start by nationalizing some of the failing banks rather than just handing them money...
Of course, Bush and the Repubs might obstruct, but they are up against the same horrible pressure that got us here to this place, so I suspect you could actually force the Decider not to veto something coming out of Congress Thursday/Friday that is a progressive solution. Because by the end of the week we WILL be in total crisis, I think, for the reasons you state.
Immediate:
1) open credit by guaranteeing it to small business
2) stop runs by assuring people that their money is safe
3) Create a mechanism for having a safety net for bank failures
Mid term:
4) regulate and oversight
5) create a safety net for the people
a) health care safety net
b) employment safety net
long term:
6) Invest in future technology/business
"What about my 401(k)?" Unless you plan on pulling it out tomorrow, thinking long term is in your best interests. And if you do plan on pulling it out tomorrow and you have been building it for the last 20 years or so, well based on what you put in, it's still way up.
So, besides the loosening of the credit markets, just what is the "crisis" that requires $700 billion (and at $700 billion, why not just write checks to every taxpayer for $10K each and let consumerism save the day? It would be a hell of a lot cheaper.)
We don't have the resources to rush anymore without a long, cold, hard look. To paraphrase from one of my favorite movies, "A Few Good Men", "my feeling is that if this...is handled in the same fast-food, slick-ass ' Persian Bazaar manner with which (Bush) seems to handle everything else, something's gonna get missed."
The arguments advocating the 'let it fall' point of view are simply a further indictment of the US educational system and of those who refuse to learn more.
The sites I frequent (or write), I find myself nodding when some of the conservatives say stuff, and shaking my head when some of the liberals say stuff, and agreeing with others on both sides, and this is all really fucking with my head.
Just goes to show you how pooched up this really is, if progressives can't come to some sort of consensus at all about this crisis, or the bill from yesterday...
The lack of concern among many lefty bloggers is, frankly, shocking. I've lost a lot of respect for some people who I've been a fan of for past few years.
Anyone who argues that stocks going up today is proof there is no crisis is akin to wingnuts arguing that a cold day is proof that global warming is not happening.
http://www.michaelmoore.com/words/message/index...
Definitely something to consider.
"When there's blood in the streets, there's money to be made."
"Sure, I guess if you're 20 it's not a big deal to shrug and say - Let it all burn! Who cares if there's another recession?"
But if you're middle-aged or older and have been diligently saving and denying the luxuries so you can put away a nest egg for retirement, this is devastating. My mother and mother-in-law lived through the Great Depression and they have vivid memories of lost businesses, banks closing and many nights when they went hungry because there wasn't enough for dinner.
Let's stop the irresponsibility and listen to reason!