The Brian Lehrer Show

Why is the US government bailing out our banks?

Is this capitalism?

Shouldn't we let these banks tank?

Why do people criticize people on welfare and food stamps and are quick to end these benefits while having NO problem bailing out corporate America any time they go bankrupt because of incompetent CEOs?

Can we end corporate welfare???

Any markers you can point to as to WHEN to BUY real estate? IE the low point in that market?

My calculation had been, subtract 8 years (150%) and add the annual inflation rate -- as we approach this number I need a few more markers that relate to current conditions, i.e. discount for bleak short term growth.

Like most Americans Real Estate is my primary interest in everyone else's money -- otherwise known as "The Economy" -- except I am a buyer looking for a fully corrected -- and then some -- market.

This bail out is just another one of the concept of Socilizing Risk.

Capitalism as I have understood it is about taking risks and being rewarded if you succeed when you took the risk.

Here we have a situation where Bear Stearns took risks and failed and should have been allowed to fail and if others were to go through with the ripple effects then so be it.

But to bail out someone who takes risks only suggests that Financial Institutions can take all the risk knowing they will be bailed out as always.

For years FASB and others have been trying to figure out how to quantify one of the other realms that turbocharged our world markets -- derivates. They never have of course.

Could Derivate based trading be another "domino?"

The last time American sociey had a true capitalistic economy was probably before the mid-nineteenth century. Read "Gangs of America: The Rise of Corporate Power and the Disabling of Democracy" by Ted Nace. We live in a "corporatocracy".

Bailout? Paying $2 for an asset that sold for $30+ on Friday? Sound like Bear went belly-up & there was a fire sale for what little was left of the furnishings & such. The owners didn't get bailed out. More like washed out. (Which is as it should be). But as with all financial institutions, many third-party innocent (and not so) were protected from this belly up - i.e. the financial system which is vital to the 'real' economy's functioning is being protected - pretty much as intended. Doing nothing may satisfy some ultra-free-market ideological fetish or radical Marxist-Leninist revolutionary brinksmanship theory, but risks allowing malfunctions in the financial markets spilling over into the real economy in an unnecessaryily major way. The Fed et al. are doing exactly what they should - trying to protect the real economy from the excesses and distortions that have arisen in the financial markets. There will be time in future to restructure those financial markets to rid the system of those excesses & distortions. Right now, the task at hand is to manage things to prevent that spillover, which would hurt many innocent people who had no part in making this mess.

Where can I go to get help from the FEDs with my mortgages? My name is Bear Sterns. Contact me at ibug.sylvesteranthony@gmail.com I welcome all advice.

I am really upset that Gretchen Morgenson said on your show that under the new bankruptcy law a person can no longer discharge credit card debt. While I am sure the credit card companies are happy to prepetuate this myth, this is simply not true. This is simply not true. The bulk of credit card debt that most bankruptcy fliers have can be discharged. This mistake has to be corrected so your listners do not make bad decisions on bad information.

Under the new (2005) law, which certainly is mean-spirted and anti-consumer, there are a number of new restrictions on discharging credit card debt. Most of them relate to the type of purchase (e.g., luxury goods) and the time of purchase (e.g., 90 days prior to filing). In fact, if you read the new bankruptcy law, you can plan ahead to discharge the bulk of credit card debt.

I sincerely hope that no one comes away from your show with the understanding that credit card debt can not be discharged in bankruptcy and consequentially chooses to pay credit card bills instead of a mortgage, or worse, chooses not the seek bankruptcy protection when that would be right (i.e., least bad) option.

I would be happy to come on your show and talk about the provisions of the new law if you would like.

Mr. Lehrer,

I have high regard for you as a journalist; however, I saw an interview you did w Noam Chomsky while Charlie Rose was recovering a while ago; I recall that you appeared to be surprised by some of Chomsky's assertions about the structure of our political and economic system. If I may suggest that you reexamine his basic critique that our government is one by the rich and powerful, of the rich and powerful and for the the rich and powerful.

Thus it is unlikely that we will ever see the money removed from our election cycles by public financing because it would remove the reins of manipulation the rich hold over 'our' government. This is usually dismissed by the MCM as 'populist' but I think we all better take another look. I recommend Paul Krugman's "Conscience of a Liberal" if you'd like another view of what has happened in the US since the Great Depression. Krugman and Chomsky would be great guests.

Brian,

There’s much mystery about the spreading waves of red ink if you think about it as a physical phenomenon, like a contagion. The key is to not look for what controls it, but learn about the process going out of control, almost as a living independent thing. It’s a physical science perspective. It could be highly useful if you or anyone else who learned how to use it.

All the best

Antonio: If your name is Bear Stearns, you're out of a job and stuck with worthless paper. The FED isn't giving you a dime.

The bailout actually wasn't for Bear Stearns. It was for JPMorgan and all of the firm's clients/transactional parties.

Bear Stearns is gone. Once the deal closes, it won't exist as an institution anymore. I wouldn't call that a bailout. That's what should happen to a bank that takes risks and fails.

"The fundamentals weren't there" ... "Save, save, save" ... "The overextension of credit" These quotes together wrap up why we are where we are. Ordinary, unsophisticated people made poor decisions and over-borrowed for unsound reasons. It is not a new thing that ordinary, unsophisticated people will often make poor decisions and will over-spend & consequently over-borrow to sustain their over-spending. What is somewhat new is the degree to which the financial system over-"innovated" to enable such unwise economic decision-making. And what is ultimately most problematic is the degree to which people who save & invest for sound economic reasons got caught up in the game by allowing the financial system to channel their savings & investments to so many fundamentally unsound borrowers. Lots of blame to go round here: borrowers, intermediaries & financial engineers & investors. The "unwinding" of this poor decision-making & fix of the financial system will be complex and take time, so let's be smart and give ourselves the time to do it without foolishly also creating unnecessary economic pain for millions of ordinary innocent bystanders who themselves did nothing wrong. The people who most benefitted from these financial lunacies should & will pay for most of it.

Poster [8] is indeed correct.

Ms. Morgenson's statement that credit card cannot be discharged is not true. Based on a means test - correlating to the media average income in each state (here it's $41,000) there is an equation that allows the filer to clear the first hurdle of any presumption of (credit card) abuse. Even if that's not cleared, the trustee can schedule a hearing and has the latitude to allow a liquidation (Chapter 7), or in a worse case, a repayment (Chapter 13).

It was a long process but I had low six figures worth of credit card debt (50% was fees and interest) completely discharged last December. It is a lengthy process that demands a lawyer (costs average $2K) but can -- and in many cases, should -- be done. -T.U.

Why doesn't the amount of FDIC insurance of insured deposits of $100,000 and $250,000 for IRA accounts get raised. The last time it was raised was 28 years ago. For retirees $100,000 is not a significant amount and maybe this would restore confidence with some of the banks.