Streams

Massive Bailout

Monday, September 22, 2008

Daniel Gross, senior editor at Newsweek and Moneybox columnist for Slate, talks about the $700 billion bailout proposal.

Then:
Stephen Moore, editorial board member for the Wall Street Journal, talks about why he's anti-bailout.

Should Congress approve the measure? Comment below!

Guests:

Daniel Gross and Stephen Moore

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Comments [119]

Teresa from upper east side

I'm no expert on economics but more than one person I know in that sector has said that Paulson and Bernanke could have avoided this meltdown if they acted a year ago. Why should we trust Paulson now with our money? As Kevin Philips said on Bill Moyers Journal: this is like watching the arsonists who started the fire put on fire hats.

Sep. 23 2008 10:27 AM
Melanie from NYC

I think the bailout should go to the former homeowners in the form a fixed, 30-year mortgages at 5% interest so that they can refinance the homes they lost. Those who lost their homes for reasons other than balloon mortgages, such as job loss, will still be without their homes, but the homes that cannot be refinanced by the original homeowners can be then offered to others at the same fixed 5%.

Sep. 23 2008 10:25 AM
sheila m from washington heights

Sarbanes-Oxley provides for prosecution of CEO's who lie, ie, misrepresent the health of their fibancial statements. I can think of 2 investment bank CEO's who claimed "health" when they were on verge of collapse or big losses.

R.Fuld, ceo of Lehman, kept claiming they were adequately capitalized the last week prior to collapse.

Stan O'Neill of Merrill Lynch said in July 2007 that they were safe, not exposed to subprime problem. In Oct 2007 they took $8bn loss, largest in history and several billion mo0re because of subprime exposure.

Sep. 23 2008 10:24 AM
Dave from Brooklyn

Teen: Mom, I wrecked the car. I need another one.
Mom: Well... OK, but there are going to be some rules around here.
Teen: No way. You drive like an old lady, what do you know about drag racing?

Gambler: Honey, I lost our savings at the craps table. We'll need to dip into the kid's education fund.
Spouse: OK, but NO MORE GAMBLING. It's too risky.
Gambler: What?! How do you think I'm going to win it all back. Don't you worry your pretty little head. I'm a professional.

Sep. 23 2008 09:09 AM
Jacob from NYC

Don’t just look at the last week. Look at the last 25+ years. We’ve careened from the junk bond scandal to the S&L bailout to derivatives crises to the dot com bubble to accounting debacles to energy market manipulation and now to a mortgage and credit crisis that threatens the entire global financial system. The common thread here is deregulation of the markets, and the results are entirely predictable. Wall Street reaps massive profits, and taxpayers pick up the tab when the system inevitably collapses. The same names have continued pushing for more deregulation despite the disastrous results, and count John McCain among them.

People have lost their homes and their jobs. They’ve lost their pensions and their health care. Now they’re being told that their savings and investments aren’t safe either. But they want you to send these people back to the White House because they still have work to do. They haven’t taken Social Security yet.

Folks, are you catching on yet?

Sep. 22 2008 06:43 PM
PJ from Wall Street

"But at the heart of the problem is Congress and its deeply corrupt relationship with Fannie Mae and Freddie Mac."
John Steele Gordon in Freakonomics in 9/22 NYT.

Chris Dodd, Barney Frank and -- yes -- Obama got us into this. Let' rational thought get us OUT.

Sep. 22 2008 06:01 PM
Drlibra from NYC

After reviewing the history on Wiki (below) I was reminded that this story is too familiar not to believe that some small group of "the smartest in the room" did not calculate the bailout would be necessary and/or will not profit from it if they have not already done so...
Silverado Savings and Loan
Silverado Savings and Loan collapsed in 1988, costing taxpayers $1.3 billion. Neil Bush, son of then Vice President of the United States George H. W. Bush, was Director of Silverado at the time. Neil Bush was accused of giving himself a loan from Silverado, but he denied all wrongdoing.[2]

The US Office of Thrift Supervision investigated Silverado's failure and determined that Neil Bush had engaged in numerous "breaches of his fiduciary duties involving multiple conflicts of interest..." Although Bush was not indicted on criminal charges, a civil action was brought against him and the other Silverado directors by the Federal Deposit Insurance Corporation;
As a director of a failing thrift, Bush voted to approve $100 million in what were ultimately bad loans to two of his business partners.
Neil Bush paid a $50,000 fine and was banned from banking activities for his role in taking down Silverado, which cost taxpayers $1.3 billion. A Resolution Trust Corporation Suit against Bush and other officers of Silverado was settled in 1991 for $26.5 million.

Sep. 22 2008 03:29 PM
Ling from NYC

The pressure with which the Administration is exerting to push through the bailout bears an eerie resemblance to how they got the authorization to go to war with Irag. I wonder if the Congress has learned from that experience and since grown some spine that might enable it to stand up against such tactics.

Sep. 22 2008 03:27 PM
Richard from Spokane


I like the Japanese 'way' of hari-kari .. or ritual suicide solution of honor restoration.

It could be a new kind of reality television show.

Sep. 22 2008 12:13 PM
Joe Corrao from Brooklyn

North American Union is coming people...that's what this is all about

Sep. 22 2008 11:39 AM
Joe Corrao from Brooklyn

http://www.john-f-kennedy.net/thefederalreserve.htm

Sep. 22 2008 11:34 AM
hard work from Sayville,NY

I'm tired of hearing how good life has been these past 20 yeARS. I have worked very hard for the past 40 years and now see my little IRA being distroyed and I have to pay taxes for all these happy people who got rich by scams.

Sep. 22 2008 11:03 AM
Alex from brooklyn


If we are going to bail out non-US based institutions, and this truly is a world-wide crisis, other governments should contribute to the bailout fund.

We have a record deficit and increasing unemployment. Plus, a very weak dollar. It's not like we've got the strongest economy in the world or can afford to do it ourselves.

Sep. 22 2008 10:58 AM
equal justice from Sayville,NY

The little guy steals or has drugs on him and he goes to prison, the big guy steals and he gets bailed out. Where is Justice?

Sep. 22 2008 10:55 AM
CH from Staten Island

Oh, and as I heard on NBC's MTP:
"Welcome to the new Peoples' Republic of Wall Street."

Sep. 22 2008 10:55 AM
CH from Staten Island

I particularly object to extending the "Doctrine of Infallibility" to Paulsen and the FED. How dare they strip the right of the taxed to question the taxer. This isn't the 18th Century and US taxpayers are NOT the colonized. We have the right to demand full disclosure and oversight, and they have the obligation to explain thoroughly and provide access to those we elect to represent our interests.

Sep. 22 2008 10:54 AM
Mark from Manhattan

Remember this date July 11, 2010 . The complete collapse of the financial system.

Sep. 22 2008 10:51 AM
jawbone from Parsippany, NJ

Gregg Gunn -- According to Bernhard's analysis at Moon of AL, the underlying main problem is not the mortgages. That has merely tripped the wire that has set off a run on these CDS's --credt defaul swaps, a type of insurance against bets going bad which were underfunded, unregulation, unenforceable except as private contracts, and totally nontransparent.

What's sticking the credit flow is that no one wants to lend to someone if they don't believe their insurance is good.

So, according to what I, Econ Dummy, have gleaned, that's what's the underlying problem now.

Please, anyone with expertise! Is that a good analysis?

Warren Buffet, I read, labeled these CDS's "buried time bombs" and called them Weapons of Mass Destruction for the financial sector.

See, there really were WMD, just buried in our arcane and increasingly Ponzi schemed financial networks.

Sep. 22 2008 10:48 AM
Dan from Westchester

Amen to JG above re Moore's comment on the rise in US asset value since Reagan. Manufacturing has been gutted, we did nothing about energy needs, health care, emergency management capabilities... What kind of wealth is that?

Sep. 22 2008 10:48 AM
Bert Picot from Jersey City

I would like my representatives to oppose a quick solution that gives one man all the power. If the average American's pension is at stake then those pensions should be secured with some government support that eliminates the middlemen. The government should direct taxpayer funds by expanding the SBA program to give small business's access to credit. I think a special committee should be formed with representatives of Fed, Treasury, Congress, Economists, Labor and some others that would work on a long term solution.

Sep. 22 2008 10:47 AM
Richard from Spokane

so .. ?

Privatize profits ...

... and socialize losses ?

Sep. 22 2008 10:44 AM
PJ from Wall Street

The comments above that "everyone wants a freebie from Washington" and let's all fling invective at anyone who has a higher compensation that we do are the real source of financial problems.
Get government out of the way and let free markets work for institutions -- and individuals.

Sep. 22 2008 10:41 AM
Graham from Paris


[68] Dale from Park Slope wrote,

"Fannie Mae and Freddie Mac should never have been private enitites."

Exactly right!

Now that the private managers screwed things up, "Fannie" & "Freddie" can become public again.

Sep. 22 2008 10:40 AM
Greg Gunn from Brooklyn, NY

Why can't we just continue the process of letting companies holding these "toxic" assets absorb their own losses by writing them down to market or selling, rather than making taxpayers buy them at inflated prices? The market has already written off $600 billion of bad assets; why can't they handle the rest?

Also, why do we think that the government will know how to price assets that the financial market doesn't want?

Sep. 22 2008 10:39 AM
Toussaint L'Ouverture from Sacramento, CA

No.

Sep. 22 2008 10:39 AM
jawbone from Parsippany, NJ

Bernhard at MoonofAL had predicted that our increased need for other countries to buy our debt would leave the US liable to two strong factors. 1) A decreased debt rating, making our borrowing more expensive for us. And 2) the lending countries will expect some kind of quid pro quo, would demand something in return.

Today, Bernhard reports that China apparently has made our support of Taiwan one of its conditions for continuing to prop us up.

http://news.xinhuanet.com/english/2008-09/22/content_10091587.htm

"The Chinese president also praised the good momentum of the development of the Sino-U.S. ties in recent years in various areas.

He said China is ready to work with the U.S. side to intensify dialogue, exchanges and cooperation, and properly handle issues concerning mutual interests and of major concern, particularly the Taiwan question, in a bid to push forward the sustained and steady development of the Sino-U.S. constructive and cooperative ties."

Bernhard's analysis link:

http://www.moonofalabama.org/2008/09/selling-taiwan.html#comments

Sep. 22 2008 10:39 AM
Vernon from Brooklyn

Will the banks reinstate the 1 million Home Equity Lines of Credit that they froze over the past few months, for NO reason?

Including my $100,000 HELOC that they froze while I was in the middle of renovations. they screwed me so why shouldn't they get screwed.

To hell with the greedy bankers, let them suffer like the rest of us

Sep. 22 2008 10:38 AM
elizabeth from brooklyn

i'm all for paying my fair share of taxes. however, i don't agree with the war, or government bailouts. my money could be used for much better things. insurance for starters. my husband and i pay over $500 a month for our health insurance.

Sep. 22 2008 10:38 AM
LISA from Saint Louis

sorry know not no, frustrated by issues brings grammatical errors! ;-)

Sep. 22 2008 10:38 AM
bob from clifton, nj

Lets review the origins of this catastrophe –
Deregulation: Sen. Phil Gramm, the Gramm-Leach-Bliley Act & Depository Institutions Deregulation and Monetary Control Act of 1980.

BTW, I need a bailout of my cc debt too

Sep. 22 2008 10:37 AM
Dallas from NYC

Brian, you talk about detail and how short the plan is but you've read none of it on the air. Do your listeners a service and PLEASE read section 8 from the plan:

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Sep. 22 2008 10:37 AM
Jeff Putterman from Queens

The increase in "wealth" your guest points to over the past 25 years, measured in US dollars, is nonsense. It is merely the effect of inflation and a consequently depreciated dollar.

To understand this more fully, go to Europe and see how little the dollar buys now!!!

Sep. 22 2008 10:37 AM
Al Weller from new jersey

1. If you believe that markets operate to create profits, then you cannot believe that there is a real opportunity for the Federal government to benefit taxpayers through bailouts.
2. Has anyone estimated the ultimate amount at risk with bailouts? In theory, all you have to do is add the value of each contract to get maximum exposure.

Sep. 22 2008 10:37 AM
burtnor from upper west side

Why is there no punishment for the people who got us into this mess? Why is their reckless disregard for the country not criminal and subject to prosecution? Are there really NO laws under which they can be held accountable?

Sep. 22 2008 10:37 AM
Calls'em as I sees'em from New York City

-- In bailing out the banks and insurance companies, we should also do the following three things to help the middle and working classes:

(1.) restore the historic bankruptcy laws so that regular folk can get relief, too. This should include student loans of all kinds;

(2.) increase free student financial aid and reduce and extend student loans and interest rates for such-- right now a huge percentage of people under 40 (and some over) have student loans. I have many young attorneys in my firm who will never be able to buy a house because they already carry $50,000 - 100,000 in student loans -- they are over-extended. Also make all student loan interest payments tax deductible;

(3.) lower all consumer debt interests rates and make some if not all interest tax deductible, like it use to be.

-- If Congress does these things some businesses will make less, but more money can flow into longer term investments such as houses and retirement, educational and medical savings plan. Long term investments can stabilize the markets, but profits to a few will be lower -- too bad for them.

Sep. 22 2008 10:36 AM
Taher from Croton on Hudson

Let’s not forget, Alan Greenspan was a right wing apparatchik, who had no interest in limiting the free market's excess. It is a system designed to get much for the few and little for the many.
Keep on dreaming Stephen Moore.

Sep. 22 2008 10:36 AM
KC from NYC

Bob: Lehman didn't get bailed out because they weren't big enough. Which is to say, they didn't steal enough money quickly enough to grow enough to be indispensable.

Sep. 22 2008 10:36 AM
John Freund from NJ

sure we've had a run up for a quarter of a century but it is based on VAPOR. Math games with money...not based on making or building things. We've off-shored that kind of productivity and wealth.

Sep. 22 2008 10:36 AM
Robert from NYC

NO BAILOUT!!!

Sep. 22 2008 10:35 AM
Alex from bk

Stephen Moore you're a good man.

Sep. 22 2008 10:35 AM
Alex from brooklyn

Silver Lining of the Financial Crisis #1 (GOP Edition): The Iraq War doesn't look so expensive anymore, does it?

Sep. 22 2008 10:35 AM
LISA from Saint Louis

I am no expert in business. However, I know well in advance when I am having financial troubles and no when to cut back and be frugal! Where is the financial awareness in big business? These people are paid to be experts in their field. Doctors are held responsible when they are at fault in the operating room. Why not the same standards for companies such as AIG and others?

Sep. 22 2008 10:35 AM
JG from NYC

Moore's comment about wealth-creation and asset value absolving the Reagan philosophy is nonsense. The Reaganites persuaded congress to let them do whatever they pleased precisely in pursuit of wealth and asset value and they went hog wild building the illusory structures that are now collapsing. Good for them, they got wealthy; bad for everybody else.

Sep. 22 2008 10:35 AM
Robert from NYC

And what was meant by NOT A PUNITIVE MEASURE. It should be that's the point. Anybody who supports this has made money on this.
Wealth creation, did he say wealth creation? Maybe for him and other 6+ figured income folks. Screw your guest and others who think this is the way to go. And Obama should dump Robert Rubin. Have you seen Democracy Now today? Well watch it on CUNY later at either 6:30 pm or 1 am.

Sep. 22 2008 10:35 AM
Michael from Park Slope

I noticed that when Mr. Moore was enumerating the list of contributory factors, he mentioned a too-high growth of the money supply and interest rates that stayed too low for too long.

He failed to mention Lord Greenspan, a favorite of the Ayn Randian philosophers of the Wall Street Journal editorial board.

Sep. 22 2008 10:35 AM
Joe Corrao from Brooklyn

Brian why don't you play some Ron Paul clips from wolfe blitzer yeasterday....

Sep. 22 2008 10:34 AM
A Dude from NYC

How will this bailout affect the dollar an inflation? Will it actually cost us more in inflation and our money being worth less?

Sep. 22 2008 10:34 AM
anonyme from NY NY

we are just handing it all over - don't you see it is next stop Argentina and we have nobody but ourselves to blame because we've been busy consuming - this is all by design and i wonder if this is this year's OCTOBER SURPRISE!!!

Too bad about Eliot Spitzer and his socks - he was good at going after cheaters who probably got back at him by exposing his romps - he's hardly the first pol to hire a hooker!

we need to control bubbles they devalue everything!

Sep. 22 2008 10:34 AM
eva

pursuant to this discussion, I recommend listening to Bill Moyers' Journal with Kevin Philips and Gretchen Morgensen.
They're all three about to dump tea in the harbor. And they're right.

Sep. 22 2008 10:34 AM
Richard from Spokane


NO BAIL OUT !

How about we spend ONE TRILLION AMERICAN DOLLARS on cultivating the pursuit of wisdom in America instead of rewarding greed .. ?

Sep. 22 2008 10:33 AM
Alex from brooklyn


I have a mortgage. What if I offer it up in this auction at $1 million? Won't that be lower than anything that the banks offer up?

Or, I can offer the government a box, and a price of $100,000. They'll get to see what is in the box only after they make the purchase.

The reverse auction only works of the buyer has a way to evaluate the value/deal of what is offered. No matter what else happens, there must be MASSIVE information disclosures before any debt purchases occur, and time for people to evaluate it. Otherwise, it is free unregulated money given to the financial industry.

Sep. 22 2008 10:32 AM
dale from park slope

Fannie Mae and Freddie Mac should never have been private enitites. By becoming private companies w/shares listed in the public market, there was never ending pressure on executives -- as there is with every publicly traded company -- to increase profits quarter after quarter. Thus, executives were incented to take on more and more risk. Had these entities remained private, they could have stayed with a relatively simple mandate of providing liquidity for relatively safe mortgages.

Sep. 22 2008 10:32 AM
Steve (the other one) from Manhattan

Moore is clueless - his editorial page cried and screamed at even a whiff of regulation. He has reaped what he has sown.

Sep. 22 2008 10:31 AM
barry from Manhattan

"MARRY IN HASTE"
Good one!
This is triage folks.
IAG will make money, from all around the world mind you.
Not the preferred way of course...

Sep. 22 2008 10:31 AM
steve from brooklyn

Marx said that economic systems undergo revolutionary change when their contradictions make them unworkable. Next up: socialism. Here it comes.

Sep. 22 2008 10:31 AM
Mike from NYC

If this was 1929 would the WSJ allow letting the banks fail?

Sep. 22 2008 10:31 AM
Steve Mark from NYC

If 2/3 of the economy is based on spending, why not eliminate all credit card debt, refinance the subprime mortgages, take over the oiil companies and reduce profits and have US consumers spend their way out of this? Why do we jave to be dependent on a few big banks?

Sep. 22 2008 10:31 AM
bob from huntington

does the bailout include lehman bros., or were they too late to the party?

Sep. 22 2008 10:30 AM
jawbone from Parsippany, NJ

Tony from San Jose: Simple answer, no.

Lehmann was allowed to go under bcz they had actually taken care to limit their exposure to these tricky financial instruments. Thus, the failure of Lehmann would not take down a huge number of other banks. So they could be used as an example of "moral hazard."

So, alas, can all of us little folks.

Donald Trump? If you owe a little, the bank owns you. If you owe a lot, you own the bank. Just enlarge that concept and that's why we get the moral lecture, but others get massive bailouts in spite of the moral hazard.

Sep. 22 2008 10:30 AM
Kenneth McLean from Stamford Connecticut

The pension plans of many Americans would suffer if the bailout was not implemented.

Sep. 22 2008 10:30 AM
Briged Smith from nyc 10003

Congress is about to recess for a month for the
elections. The credit markets are frozen.
Henry Paulsen's proposal for a 'bailout' on Thursday halted the death spiral of the stock market for now.
Congress DOES need to approve Paulsen's proposal before they recess and can preserve the need to include other issues (foreclosures, etc) by including
'bookmarks' to address each of the topics
within a set time frame such as 30 days, 60 days. That will make it LAW that each topic is
dealt with.
If we do not pass this bill, I believe the panic will set in past a point of return and we'll have years of a depression that will have a desperate affect on Main Street.
The Blame Game can come later. The rehashing and analysis on what happened & why can come later. For now, I just want to survive.

Sep. 22 2008 10:29 AM
steve from brooklyn

"IT's NOT THE END OF FREE MARKET CAPITALISM," Brian. Your guest is an economist and he's not so sure. Maybe he's read Marx's theory that economic systems change when their contradictions are no longer workable , and while capitalism is striking out, socialism is on deck.

Sep. 22 2008 10:28 AM
Alex from brooklyn

Oversight, oversight, oversight.

The executive branch MUST be given clear guidelines, standard and outlines.

It MUST be accountable for its decisions, and individuals who make those decisions and advise on those decisions must be available to the American people -- and the congress!! -- both before and after actions are taken.

Additionally, any deal or purchase of debt should have a cooling off period, before it goes final. The purchases should be announced, with the details made public. And then, there should be a public investigation and comment period. Last, there should be a return period, one that gives the next administration a chance to reverse some of these deals.

Sep. 22 2008 10:28 AM
jawbone from Parsippany, NJ

Rowan, as a banker, is Bernhard at MoonofAL on point here?

Wld much appreciate input from those who know this kind of economics. I have developed a good feeling about Bernhard's analyses over the years, but I am an econ dummy. Cubed!

Sep. 22 2008 10:27 AM
josh kraszewski from brooklyn

isn't it funny that when somebody suggests pumping more government money into health care and education they get accused of being pinko socialists?

Sep. 22 2008 10:26 AM
eCAHNomics

It's the end of capitalism and the furtherance of fascism. Profits are private and losses are public. Wash. Rinse. Repeat.

Sep. 22 2008 10:26 AM
chris_52 from nyc

On the Sunday talk shows the fact that the CEO's are STILL getting their golden parachutes came up (Cokie Roberts? Eleanor Clift?) and the speaker was shut down with "Oh, that's small change. It doesn't matter" How dare he? (Wish I coould remember his name). If it doesn't matter, take it back and give it to NYC -- I'm sure Mayor Bloomberg could make good use of it -- including giving some back to us! (Since it doesn't matter)

And yes, it is all moving too fast and I'm sure those of us who support slowing down will soon be called unpatriotic

Sep. 22 2008 10:25 AM
MAO

brian you are so naive

Sep. 22 2008 10:25 AM
SuzanneNYC from Upper West Side

Defeinitely here we go again. It's the old "marry in haste, repent at leisure" trope. So if Congress rushes into passing this bail out and things turn out to be not so bad or maybe this makes things worse, then we get to endure years of handwringing "if only I'd known then what we know now". At worst it's one more step on the long road to the dictatorship of the executive branch and the undoing of our three equal branches of government system.

Sep. 22 2008 10:25 AM
Mike from NYC

What a joke. These guys who were all pooping their pants last week are now bitching again about "big government".

Sep. 22 2008 10:25 AM
jawbone from Parsippany, NJ

Moon of Alabama, Part 2

"Paulson knows that the crash of the CDS market is inevitable. His plan is an attempt to let the taxpayer pay for the stabilization of the middle of the pyramid in the hope that the big crash will come only after the election (and in the hope that the loot might help Paulson's beloved Goldman Sachs to survive.)

There is only way to avert the crash.

Declare all CDS contracts, worldwide, as null and void. There is precedence for this:

'During the Great Depression, many debt contracts were indexed to gold. So when the dollar convertibility into gold was suspended, the value of that debt soared, threatening the survival of many institutions. The Roosevelt Administration declared the clause invalid, de facto forcing debt forgiveness. Furthermore, the Supreme Court maintained this decision.'

The maze of the value and ownership of $65+ trillion of financial credit insurance contracts has frozen the credit markets. Nobody is lending to anybody else because the value of the counterparty is in doubt.
...
A $700 billion bailout can not save a unregulated $70 trillion CDS market that is under severe stress."

This may be the nut that must be cracked. Do out Congress Critters understand this, see this problem??

Oh, Bernhard also supports HOLC. Send in the HOLC! (pronounced Hulk, like the action character)

He strongly suggests American citizens should call their Congress Critters. ASAP.

Sep. 22 2008 10:25 AM
Amy from Manhattan

Wow, only 3 pages & they still fit in an unconstitutional clause to keep the courts from fulfilling a role the Congress isn't empowered to interfere with. Guess they still haven't learned about separation of powers. Sounds like they're they're just switching the lack of oversight to the Treasury Dept.

It worries me when any bill is rushed through without adequate discussion. Someone always manages to slip in something to benefit the same people who've already been benefitting all along.

Sep. 22 2008 10:25 AM
jawbone from Parsippany, NJ

http://www.moonofalabama.org/2008/09/solution-declar.html#more

European view: Cancel all CDS, credit default swaps--globally. Declare them null and void. Bernhard says there is precedence for this.

"We currently see a credit-freeze because nobody wants to lend to anybody as it is impossible to know how much credit insurance the other party has written or how much it depends on their validity. You do not lend to anyone who might already be bust.
That is the situation we are in and it shows why the Paulson plan is utter cr*p and nothing but a huge robbery.

The Paulson plan would not help at the bottom of the inverted pyramid, the housing market, and not at the top, in the CDS market."

Cont'd below, with the real money quote. Literally.

Sep. 22 2008 10:24 AM
Alex from brooklyn


This crisis is not a political crisis, where pure leadership is sufficient. Rather, it is a crisis that calls for real experts -- and it should only be those with good judgement -- need to come up with a solution or intervention.

The problem, of course, is that there is no reason to trust this administration's ability to pick those people. The more technical issue, the worse the policies have been. Even when there have been kernels of good ideas, the actual policies have been disastrous.

But this is not a matter of what Obama or McCain actually understand. Rather, it is a test of the kinds of advisors they pick, and their ability to craft policy together.

Sep. 22 2008 10:24 AM
anonyme from NY NY

The attack on Iraq was was planned at least as early as October 2002, but not even the press knew this.

Sep. 22 2008 10:24 AM
Steve (the other one) from Manhattan

Brian - ask one of your guests why we should trust Paulson - he ran Goldman and is one of the people responsible for this mess.

Sep. 22 2008 10:23 AM
Inquiring Minds

WALL STREET 2008 BONUSES = FRAUDULENT CONVEYANCE

WIKI:
"The usual fact situation involves a debtor who donates his assets, usually to an "insider", and leaves himself nothing to pay his creditors as part of an asset protection scheme. However, it is not uncommon to see fraudulent conveyance applications in relation to bona fides transfers, where the bankrupt has simply been more generous than they should have or, in business transactions, the business should have ceased trading earlier to avoid giving certain business creditors an unfair preference.

The Bankruptcy Code authorizes a bankruptcy trustee to recover the property transferred fraudulently for the benefit of all of the creditors of the debtor if the transfer took place within the relevant time frame."

Sep. 22 2008 10:23 AM
Christian Aguayo from NJ

Why is the Administration and the Republican party doing this now. They have preached no regulations and that free market would take of themselves. The bail out should be for the people. We stop the mortgage defaults by helping the people. We should not bail out the fools and the greedy.

Sep. 22 2008 10:22 AM
ken

The time has come people; horde bottled water and arm yourselves. An armed society is not necessarily a polite society, but an armed household can certainly fend off looters. The have-nots will be breaking down our doors sooner, rather than later.

Sep. 22 2008 10:22 AM
CH from Staten Island

1)
This rush looks like a last ditch effort to tie the hands of the next administration. Making the bailout so large and cumbersome, there will be no discretionary spending available to implement and fund needed programs for the taxpayers in the future.

2)
Interesting that Phil Gramm is heavily involved with UBS, and now the bailout has been expanded so that UBS can be included with US based banks.

3)
How much of Morgan Stanley & Goldman Sachs are being sold to Japan?

Sep. 22 2008 10:21 AM
Janice from NYC

I'm all for stabilizing the economy to avoid a depression, but, is this the only way to do that? It feels like we're not allowing people to suffer the consequences of their bad choices. But then again, everybody else has to pay for those choices either by allowing the economy to tank or by paying for a bail out.

Here's an idea: how about all the bigwigs in these firms who screwed things up in the first place give back their multi-million dollar bonuses and half their ridiculously overpriced salaries? That ought to make quite a dent in the $700 billion.

As for the defaulting homeowners: while I feel sorry for people who may lose their homes, I also feel that we all have to suffer the consequences of our actions. Lying mortgage brokers, greedy bankers, etc. may have taken advantage of these people, but why would you sign on for a mortgage in a house you have to know you can't afford? Buyer beware. Read the fine print, and do your own math before you sign on the dotted line.

Sep. 22 2008 10:21 AM
A Concerned Obama Supporter from Montvale, NJ

The rush to push through this "bail-out" legislation is a fearsome reminder of the irresponsible rush to war in Iraq and democracy-stifling Homeland Security legislation. Let thoughtful deliberations prevail, and beware of having the foxes come forward to protect the henhouse.

Sep. 22 2008 10:21 AM
barry from Manhattan

The Home Markets in California are up 13% in August
Slate dude the SKy is not falling

Sep. 22 2008 10:21 AM
Joe Corrao from Brooklyn

Phillip from Montclair....the looming crisis has been going on 10+ years, but ya they watched it happen and ignored the people that warned about it....

Sep. 22 2008 10:21 AM
KC from NYC

No Brian. Gramm is very much in the running for Treasury Secretary. Research that.

Sep. 22 2008 10:21 AM
barry from Manhattan

WMD'sss!!!!! What about Katrina!!
WMD ridiculous

Sep. 22 2008 10:20 AM
MAO

Not sure what the big deal is.

I think you guys are doing a GREAT job!

Sep. 22 2008 10:20 AM
eCAHNomics

Um, there's nothing in the 3 pages to prevent Paulson from pocketing the entire $700 billion. Anyone who sez he means well should be willing to buy the bridge to nowhere.

Sep. 22 2008 10:20 AM
smidely

Not sure what the big deal is.

I think you guys are doing a GREAT job!

Sep. 22 2008 10:19 AM
Phillip from Montclair

Why should we trust Henry Paulson to hand out billions and billions when he has spent the last two years oblivious to the looming crisis?

Sep. 22 2008 10:17 AM
Tom from Brooklyn

Is there any reason at all that the people/the government whatever, can't SUE the people responsible?

Sep. 22 2008 10:17 AM
Rowan from Brooklyn

As a banker who saw the credit crunch of the early 90's I can say with confidence that saving the banks is NOT the issue. Making them LEND again is. When banks stop lending, construction stops, expanding businesses stops, growth in economic activity stops.

Governments can't re-inspire confidence. Only time can.

Sep. 22 2008 10:15 AM
anonyme from NY NY

HERE is a revealing look at the realities behind this debacle:

the very long term issue is:

http://collaboratingwithfate.blogspot.com/ - scroll down to the 47 minute video under "credit Circulation, Coins & Collusion - video is called debt as money or money as debt

verrrry interesting!

Sep. 22 2008 10:15 AM
Susan

I can't pretend to know which way to underwrite the disasterous banking system is best, but a couple of things are clear: (1) the taxpayer should own what they pay for; (2) anyone working in the newly federalized banking system should be paid at federal government wage scales (this includes no golden parachutes and no bonuses)--the shameful, confiscatory money paid to these idiots must stop; (3) stop adding everything on every congressional wish list to this bill--keep it to an absolute minimum, which is bad enough; I can't even afford my own mortgage, let alone pay for the mcmansion some bought with liar loans; (4) make Obama and McCain tell the truth for a change--point out at every turn that no matter who is elected, taxes are going up and sevices are going down to pay the clean-up bill for this mess; (5) hedge funds and foreign banks should be on their own--the prior is a high-risk system for millionaires who know what they're getting into, andd the latter have governments of their own.

Sep. 22 2008 10:14 AM
Tony from San Jose, CA

I didn't mess up, did not rack up any credit card debt, didn't get a helloc. Can comrade Paulson give me $700B?

Sep. 22 2008 10:14 AM
Don from Manhattan

I am fundamentally opposed to the bailout on all levels -because it jeopardizes the very free market principles that have made us the most powerful economy in the world (and would allow a stronger economy to emerge from the ashes of our excess), because it will only serve to artifically support a broken economy and delay the inevitable pain until later, because it will keep property values artifically high and because it is unreasonable to put yet another $1 Trillion on the backs of taxpayers who are already carrying the price of the past 8 years of folly. Enough! Let it collapse. I'd rather take 5-10 years of short term pain and see a healthier, more robust economy emrge on the other end - free of the cancer that brought it dow in the first place. And mortgage protection for those who over-bought? Forget it! Is it tragic when people lose their homes? Of course - but that is teir problem, not their fellow taxpayer's.

Sep. 22 2008 10:12 AM
Mark from Princeton, NJ

This plan makes me sick to my stomach! Between corporate tax cuts, war in Iraq and now this bank giveaway, I feel like never paying taxes again.

Sep. 22 2008 10:12 AM
Inquiring Minds

Goldman Sachs paid out TWENTY BILLION DOLLARS IN BONUSES THIS YEAR.

$20,000,000,000.

http://www.cnbc.com/id/21819441

"One must be just, before one is generous."

http://en.wikipedia.org/wiki/Fraudulent_conveyance

CLAW THE MONEY BACK

Sep. 22 2008 10:12 AM
David from Queens

Whatever gets paid out to Bankers/Brokers/Hedgefunds HAS to be paid back or their profits should be punitively taxed to pay it back. I don't get a free ride from them - the opposite should be true.

Sep. 22 2008 10:12 AM
RadRepub from Upper Left Side

This "mortgage meltdown" derives from the government's desire to stick everyone and anyone in house--regardless if they can afford it--so they: 1) must pay property taxes, 2) can be tracked down easily if the IRS is looking for them and 3) behave themselves. Thus, homeowners (which is really a misnomer unless you've paid every single cent of borrowed money back to the bank) are permanently on the hook to pay for uncompetitive brokers' fees, exorbitant mortgage fees, endless property tax increases, etc.

Sep. 22 2008 10:11 AM
Tony from NYC

Blank check. Isn't this something like the blank chek the congress gave Bush to go to war in Iraq?

Sep. 22 2008 10:09 AM
O from Forest Hills

Why are we bailing out the rich Wall Street bank and investment firms?

Capital cronyism! What about the home owners that are facing foreclosure?

I think we should not support this bill, tough luck, let the banks fall and that's too bad. In capitalism, the government is laissez-faire, hands off, keep it that way.

this is 30 years of Reganomics coming home to roost. Let it crash and burn and then we will build again, but no, we should not be bailing out the banks.

We can't tell the homeowners too bad but say, your wish is my command to these banks.

Sep. 22 2008 10:09 AM
Josh from fort greene

One other thing: Remember the run up to the Iraq war! Remember the hot heads saying WE'RE IN A CRISIS! We need to strike now! We're all going to die! Let's let the cooler heads prevail this time. Let's take a good hard look at what we're doing and respond responsibly.

Sep. 22 2008 10:09 AM
KC from NYC

Quoting the plan:

"Decisions by the Secretary [of the Treasury] pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency" [Sec. 8].

Get that? It will make it ILLEGAL for anyone ask how the treasury spends our money. Unbelievable.

Sep. 22 2008 10:09 AM
Dallas from NYC

Insanity. This right here:

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Sep. 22 2008 10:08 AM
Josh from fort greene

The biggest joke is that Paulson as CEO of Goldman would NEVER even think of taking on a debtload like this at the current value the banks are declaring. It's a guaranteed loss and the pushers of this junk will leave with boatloads still.

This guy knows what he's taling about:
http://jtaplin.wordpress.com/2008/09/20/paulsons-deal-breaker/

We need to let the industry sweat it out for a few days.

Sep. 22 2008 10:07 AM
Graham from Paris


Let me see if I understand things:

#1 If you are poor, for whatever reason (and many of the reasons have nothing to do with anything resembling fairness or what one "deserves") then your troubles are _your_ problem to figure out.

#2 If you're rich, no matter how you got that way, the society's economy is your toy to play with along with your wealthy peers.

#3 If, in playing with not only one's own wealth but the combined financial resources of thousands or even millions of others far less fortunate financially than one's self, one _"breaks"_ or wrecks the national financial markets, the stock market or otherwise imperils the entire economy, then, suddenly, _that_ is the problem of the ordinary taxpayer to solve, including the financial rescue of many of the nation's wealthiest individuals and corporations.

Question: in all of that, where is there any sign that this a democratic society at work? And why shouldn't there be one?

Sep. 22 2008 10:06 AM
Joe Corrao from Brooklyn

Its funny how Bush wants this to get threw quickly rather than have any debate...just like the War w/Iraq debate....we need to shrink the empire rather than wipe out the middle class.

Sep. 22 2008 10:06 AM
Inquiring Minds

Note how the same groups are already profiting...

Buffett may have $3.5 billion two-day financials profit
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/19/AR2008091903008.html

Isn't there a provision in the bailout that the government can hire "outside parties" -- read, investment bankers -- to "manage the assets"?

We need to insist:
1) there are hearings/investigations
2) revolving Wall St. / Govt. door is closed
3) lobbying money is taken out of congress
4) same entities are not allowed to profit from the bailout
5) bonus money is clawed back as "fraudulent conveyance" of money

Shame, shame.

Sep. 22 2008 10:04 AM
Marissa from Manhattan

Many restrictions should be tied to the bill - I wouldn't give a blank check drawn on borrowed money from my credit card to a bankrupt family member - why give one to these corporations?

Sep. 22 2008 10:04 AM
SAF from NYC

Can the government bail out my student loan?
Why should i take responsibility for my actions if the banks can't take responsibility for theirs?

Sep. 22 2008 09:56 AM
Joe Corrao from Brooklyn

http://www.dailypaul.com/node/63149

Sep. 22 2008 09:53 AM
michaelw from INWOOD

NO this bail out is the worst thing that can happen because when this happens again we'll just do the same thing.

It is said if we don't bail out Wall Street then we'll face a depression.

Is this true?

Sep. 22 2008 09:52 AM
Susan from Kingston, New York

I am really conflicted about this bailout. While I understand the need to stabilize the financial markets, I really resent the US Treasury bailing out the companies whose CEOs and management will continue to create financial instruments which only enrich themselves and the top 1% of the population. They seem to think nothing about the rest of society or how to rebuild a healthy economy in which all members of society benefit and prosper. Having grown up in Greenwich, Connecticut where a lot of financiers and hedgefund managers live, I am certainly familiar with the sence of entitlement and arrogance which often accompanies greed. Frankly, it is heartbreaking to see that no matter how financially responsible we are, our lives and well-being remain at the mercy of these self-centered, selfish individuals who put this country at risk of economic ruin.

Sep. 22 2008 09:52 AM
jenl from manhattan

Of course this measure needs to be passed and all the politicians realize this despite the rhetoric of faux outrage. I love the way it's being couched in terms of "wall street greed and bad investment decisions." While partly true, I would also like to hear more from the politicians about what they are going to do about the "deceptive real estate brokers" and their propaganda machine (a.k.a. the New York Times real estate section), the "opportunistic" contractors and developers and others in the home construction business who profited for many years on the real estate craze; and the "foolhardy and entitled" homeowners who bought or refinanced homes on terms they couldn't afford, all the while being subsidized by tax deductions for the interest on their mortgage.

Those of us who don't own our homes in NYC are paying for everyone else's real estate mania. It is, therefore, just a LITTLE annoying to hear Obama and others calling for additional measures to help homeowners. They are the ones who created this mess in the first place.

Sep. 22 2008 09:51 AM
smidely

After Americans received a trillion dollar tax break, it's only fair that businesses got a little relief.

Sep. 22 2008 09:48 AM
smidely

OK, $700 billion but NOT A DOLLAR MORE. OK, maybe a trillion BUT NOT A DOLLAR MORE.

Sep. 22 2008 09:46 AM
superf88

anybody (in the position to) not making millions in annual bonuses went to private equity and hedge funds long ago.

so called investment banks should have died about 3-4 years ago because of this.

gotta give goldman credit for getting in the 202 line.

switching bankers from bonuses to salaries, now that the taxpayer is paying them -- this should be good for a laugh.

Sep. 22 2008 09:42 AM
Sally from Brooklyn

While I can understand the need to stabilize the market, I'd like a bailout on my credit card balance, too.

Sep. 22 2008 09:30 AM

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