21 responses so far ↓

• 1 Kristy // Sep 23, 2008 at 2:15 pm

  We all know that I don’t agree with this bailout. The government needs to just stay out of it and let the banks fail. Yes it will cause the economy to crash and things will be a little crazy for a while, but all the bailout is doing is delaying that from happening. I do not think this bailout will work. Bailouts don’t work, just look at Japan.

  It’s not Bush pushing this through its Bernanke and Paulson. They are trying to push it through quickly because they feel that the markets are going to crash if it doesn’t pass quickly. Do you really think its the CEO’s paychecks that are causing this problem? I think you might since you complain about it all the time. Wall Street is not stopping the bailout, they want this to happen. The Democrats are delaying it because they want to help “Main Street” too.

  It is ridiculous that the majority of the taxpayers are going to end up paying for the errors of irresponsible people. This bail out, in my opinion will make everything that follows much worse in the long term.

• 2 Tim // Sep 23, 2008 at 5:50 pm

  this thing didn’t happen overnight and it didn’t happen under any one person’s watch.

  People also seem to forget that Congress passed $300billion homeowner bailout. $300b and no one questioned why we should be bailing out homeowners who got into mortgages they couldn’t afford in the first place. Congress also seems to have forgotten about the homeowner bailout considering all the focus is on big bad wall street. Surprisingly, yes, it is the taxpayer’s money, but it is the taxpayers’ problem. If wallstreet shouldn’t get a bailout, home owners shouldn’t get a bailout.

  bottom line, no one, and i mean no one, wants to take personal responsibility for the mess. It’s far too easy to blame wall street than to look in the mirror and place blame on who you see.

  i simply don’t get the whole call for regulations. i do feel there should be some regulations that ensure that banks and investment firms have sufficient capital reserves, regulations to curb speculative maneuvering, and regulations that requires anyone in the market to have same transparency as banks (e.g. hedge funds).

  golden parachute? i think allowing people to stay in homes that they couldn’t afford but consciously made a decision to sign the dotted line as a golden parachute, too. executive pay has gotten out of control, especially in light of poor performance by a few; however, the amazing thing is that the share holders have not complained and boards of directors have continued to sign on executives with non-performance severance packages.

  golden parachute? what about congress who has to vote on their salaries every year, but if they don’t, their pay is increased automatically to the highest percentage each year by default.

  there is lots of panic in the system right now, and this extends beyond the US. All I’m hearing being in the UK and Germany at the moment is how they hope the US bails out, because then there govts won’t have to. The current US economic situation has global ramifications, and it shows how jittery and dependent foreign govts are if the US doesn’t provide the bailout.

  politicians do want to help out “mainstreet”, and mainstreet was irresponsible, yet no one is taking mainstreet to task, we are bailing out mainstreet with $300b plus the effects of this $700b. does anyone else see anything wrong with fixing wall street but not fixing mainstreet?

• 3 fengshui // Sep 23, 2008 at 7:33 pm

  “It seems more like capitalism but funded by taxpayers money for new levels of greed. It seems like we’re footing the bill without a payoff. Socialism in other countries is for the greater good, not for the rich.”

  I agree. I never liked the idea of ANY “bail outs” that have happened. Let the greedy capitalist corporations fail. How will there ever be any type of consequences???? There were a lot of people getting rich off of the “bad mortgage” period and no one wanted to stop it as long as everyone kept getting richer. Disgusting.

• 4 LivingAlmostLarge // Sep 23, 2008 at 9:18 pm

  First off Bush is to blame. Second he is pushing through the legislation as well. And who do you think Paulson and Bernenke’s boss is and appointed them? http://www.guardian.co.uk/business/2008/sep/23/wallstreet.congress

  If it’s not Bush’s plan why call it that?

  No, but I do not think CEO’s salaries are totally to blame. Shady accounting practices, mark to market accounting is part of the reason. What this means is that companies had subprime mortgages. They couldn’t give them away for pennies on the dollar, like normal mortgages, so instead they marked them down to market value, freezing the value. This is what Enron did and had a bunch of problems. http://en.wikipedia.org/wiki/Mark_to_market

  Mark to Market accounting. Great job banks! To understand mark to market failure read http://www.amazon.com/Smartest-Guys-Room-Amazing-Scandalous/dp/1591840538, it’s a great book and so is http://www.amazon.com/Pipe-Dreams-Greed-Death-Enron/dp/1586482017/ref=sip_rech_dp_10

  So I do not believe there should be money given unregulated. I’m sorry. The CEO’s fat paychecks, shady accounting, and stupidity needs to be regulated so we don’t end up here in 1 year.

• 5 LivingAlmostLarge // Sep 23, 2008 at 9:25 pm

  No it did not happen overnight. But the current administration was in office for the past 8 years, sworn in 2001 and will be out 2009. And there was a Republican controlled Congress from 1994 to 2006. Kinda hard to not realize that one party had a lot of decision making power for 6 years.

  I talked about the bailout and decided it was a good idea to shore up the mortgage crisis. I said back then we needed regulation as well. I am a firm believer in helping but with regulation. I didn’t think there was much regulation except shoveling more money at the problem. Ugh.

  But I could see value in not doing anything because we don’t want government involved. Fine, but don’t take any damn bailout money. I am a socialist. If you want government help fine, I’ll contribute, but you need to follow strict rules. That is socialism. Regulation = money for bailout, otherwise what is the point?

  Yep, we need to fix mainstreet as well. We could regulate mortgages be like before. We need to move back at a minimum to our previous regulations.

• 6 LivingAlmostLarge // Sep 23, 2008 at 9:27 pm

  Fengshui, I’m for bailouts to stabilize the markets and try to help the stupid mortgage debacle. I think it will be helpful. This $700b bailout is for mortgages, but heck we’re going to be giving away money for free?

  No rules, just a blank check to the Bush Administration of Treasury Secretary Paulson and Bernenke?

  Hmm…and John McCain has been calling for their jobs? How can we trust them when their party’s candidate is saying they are incompetent?

• 7 LivingAlmostLarge // Sep 23, 2008 at 9:52 pm

  http://www.wkyt.com/wymtnews/headlines/28667399.html

  Here is bush talking about his administration pushing through the bailout.

• 8 Kristy // Sep 24, 2008 at 6:25 am

  LAL, do you really think a blank check is going to be given to Paulson and Bernanke? Are they not talking about this with both the Democrats and Republicans right now?

  Of course Bush is going to talk about the bailout…he has no choice. Paulson and Bernanke are part of his administration, but the whole bailout is going to have to pass through the Democrats.

• 9 Tim // Sep 24, 2008 at 7:19 am

  and what did the democrats do during the past 2 years if they couldn’t do anything for the past 6 years? that’s right nothing, because there wasn’t a concern among the democrats and republicans. it is stupid and naive to think that the president has sole control over the markets. the fact is, if the democrats felt the economic situation was bad or they could foresee the economic situation going bad, why didn’t they propose bills or do anything about it, even though they were in the minority and definitely when they were in the majority? If you blame bush, then you must blame democratic controlled house and senate, because for the past two years they have done nothing and felt that nothing was needed. moreover, even when they were in the minority and definitely in the majority, they continued to pass increasingly large spending bills.

  again, everyone seems to have all of a sudden forgotten about the $300b home owner bailout to keep people in homes that they should lose and in mortgages that do not tie major institutions globally to economic hazard. now the proposal is to give $700b towards stabilizing econ system that could seriously collapse economies worldwide. it is very convenient and easy to blame wall street and to blame whoever is in the oval office or in congress. i would much rather put bailout money towards fixing or stabilizing institutions that could bring down all economies rather than additional money to the $300b towards home owners, who by the way everyone in their mother wants to include in the $700b bailout.

  what you talk about LAL is a long term contagion that started when Greenspan was in office starting from reagan, to bush sr, to clinton, to bush jr. everyone was hailing greenspan, especially during the clinton years. the fault definitely lies with greenspan keeping rates low and making it far too easy for consumers to get credit, and what did clinton do? nothing, he was very happy with the economic expansion. however, again, just as the current mess cannot be put on bush, neither can it be put on clinton, because the PRESIDENT DOES NOT HAVE CONTROL OVER IT. the consumer bad consumption behavior was reinforced, where there was absolutely no promotion of saving. even greenspan’s buzz phrase irrational exuberance should have warned everyone that something should have been done, yet there was no push in 1996 to curb bad spending behavior (who was president in 1996?), and that was under clinton. no everyone was very happy as gdp continued to expand, unemployment was low, interest rates were low, inflation was low. it’s fine to have 20-20 vision to bash whoever, but what we need to learn from 20-20 vision is to correct the mistakes and really stop pointing fingers. although if you are going to point fingers, you need to do more digging rather than get caught up in the political diatribe spewed all over the place. it is also far easier to be a fairweather economist.

  let’s take your contention that bush is to blame. tell me how the president is to blame and what mechanisms he has that would have prevented this?

  regulation, what regulation are you suggesting and be specific? it’s very easy to banter about regulation this, the president is to blame, but come on give some specifics. it’s easy to be in the blaming peanut gallery, but it is far more difficult to come up with a solution. what have the democrats come up with to solve the economic crisis? nothing!! they are trouble shooting what bernanke and paulson have proposed, yet they have no alternative suggestion nor where they the ones who came up with some kind of plan to fix the problem. again, it’s far easier to criticize someone else’s plan than to come up with one yourself. at least bernanke and paulson are doing something. what is congress doing? surely not coming up with ideas of their own.

  subprime mortages, if people didn’t sign the dotted line, there wouldn’t be a market for them. give me a break. it takes two to tangle, and the case of loans and debt, the person who signs the dotted line has all the control in the world to choose to sign or not to sign.

• 10 LivingAlmostLarge // Sep 24, 2008 at 1:28 pm

  Why didn’t the republicans do anything in the 12 years they controlled congress? From 1994 on. Also the democratic controlled senate was by 1 seat and it was held by Joe Lieberman, who is an independent if you recall. Which means the breakdown was 50-49-1. Not exactly a majority enjoyed by the Republican Senate previously…

  Nope, I wanted the Bailout of the $300B mortgages to be regulated as well. To let people renegotiate into normal loans, but no more refinancing and pulling out cash. No more shady loans. I didn’t mind the bailout but the lack of oversight and treating the government like a cash register didn’t work for me. Again socialism without any benefit.

  Yes we got caught up in making easy money in the tech boom. Irrational exuberance. And then in 2001 we started in on Real Estate. And greenspan did lower rates for a long, long time because he was fearful of the economy. The idea was to smooth out the dips and rises of the economy. Didn’t workout so well.

  Regulation - Mark to market accounting. Not allowing companies to “valuate” their own companies without oversight. That means they can’t make up how much it’s worth.

  In the mortgage industry they began to do this in their valuations of homes. And right now the Government is planning on buying home at the prices they “perceive” it to be instead of the fire sale prices. http://blogs.wsj.com/economics/2008/09/23/bernanke-goes-off-script-to-address-fire-sale-risks/

  Yeah that’s a great idea. Buy homes for what we “think” they are worth. Imagine that’s what got us into this mess.

  Second regulation, CEOs salaries and Golden Parachutes. Forget paying them, if they are removed, they get nothing. I’m not the only person who thinks that. http://www.washingtonpost.com/wp-dyn/content/article/2008/09/22/AR2008092202849.html?hpid=topnews

  Third, I kinda like the idea of regulating the companies we help like socialists. Basic principals. I believe we’re being made fun off and like I mentioned becoming Social Capitalists. http://opinion.inquirer.net/inquireropinion/columns/view/20080924-162482/End-of-an-era

  Why did we bailout AIG? Truely free market thinks would say let everything fail and let’s resurrect ourselves anew. I see nothing wrong with that philosophy and think it’s admirable.

  I don’t agree, but I think it’s an excellent idea. Better than this sham, bailout of giving money to companies without regulation of businesses.

  And I point out two major regulatory points.

• 11 LivingAlmostLarge // Sep 24, 2008 at 1:31 pm

  By the way if we do this bailout, a statement by a Republican Senator Jim Bunning said the same thing. We’re moving to socialism. http://www.smallgovtimes.com/2008/09/socialism-is-coming-to-america/

  Capitalism is dead. But doesn’t mean we should rush into Socialism if every is against it. I’d rather see a socialist healthcare system in place first. This is a danger line to cross into and failure will likely lead to greater fear and hatred of a socialist system.

• 12 fengshui // Sep 24, 2008 at 11:38 pm

  You can’t have it both ways. You can’t have unregulated capitalist enterprises and then all of a sudden, “help us help us! Bail us out” and “the government” comes to the rescue, yet again. There are so many people losing jobs and then don’t get severance packages. They get a kick in the @ss on the way out the door.

  I guess my biggest concern is that we’re giving all of these bailouts and we really have no guarantee that things are going to change or improve. It is a risk.

  And we’re bailing out companies with money that we DO NOT have. People don’t seem to be too concerned about this.

• 13 LivingAlmostLarge // Sep 25, 2008 at 9:24 am

  No there are no guarantees that we’ll successful with the bailout. There is no guarantee that we’ll be bailing out the average taxpayer instead of the rich.

• 14 Tim // Sep 25, 2008 at 12:50 pm

  the problem with nixing current CEO compensation for the included companies is that it is in their contracts. It will cost far more in litigation and in the end the CEO will win out. No one is talking about that, though. again, it’s easy to villify ceo’s and executives in light of the current mess. that doesn’t solve the problem. how do you regulate executive compensation without legal battles ensuing? moreover, i firmly believe that executive compensation to be tied to performance, but really the shareholders and boards have to police themselves. there will be no motivation to do well if you cap executive compensation if it isn’t high enough to reflect the pinnacle of success. with that said, forget cash, the exec should get compensation something like 60% common stock with 80% restricted, 30% preferred stock, 10% cash.

  LAL, that’s my point exactly. You cannot have it both ways. If you blame the republicans or bush, then you are saying the dems are immune, which is absolutely not true. as you said, the republicans did not have enough seats to quash a veto anyways, as the dems have not. to make things clear for you, in 2005, the republicans wanted to regulate freddie and fannie effectively. all republicans in the senate banking committee voted for it, all democrats in the committee voted against it.

  who cares what you call it, the govt has been bailing out for a long time. this isn’t the first time. america has never been a pure -ism in any shape or form, so what is the use in trying to define it into a pure -ism? there isn’t any. it only conjures stupid political fears. americans are bastards and they bastardize all systems. people on both sides of the fence are using -isms as catch phrases to scare or whatever. it makes absolutely no sense when you look at our systems.

  the govt stands to make out huge on the $700b. come on $85b for $5trillion in mortgages alone just for freddie and fannie. they could sell at 1/3 the $5trillion and have made more than enough to cover all the bailouts combined. that doesn’t even touch the other assets.

  that is the true problem with valuating anything, it is a guess. the govt needs to put some value, because there wasn’t an accurate value assessed in the first place. the prices have to be reasonable, otherwise, if you sell at fire sale prices, you will cause all house values to plummet to the fire sale price. i’m sure you wouldn’t want your house now to be worth 1/3 because you want the bailout to buy the subprime mortgages for 1/3 their original value. that would be disasterous. the one thing that needs to be verified is that the govt isn’t going to buy the houses at the original prices. i personally think prices should be set at value prior to 2004 is a fair value, because that is the time period where subprime and al-a loans and securities began to grow.

  unfortunately, there was no call for $300b oversight, because it was for the homeowner and the homeowner is just an innocent victim in all this mess. how retarded.

• 15 Tim // Sep 25, 2008 at 1:51 pm

  not sure if you were promoting mark-to-market or lifting mark-to-market rule which some people, like dave ramsey, are advocating. He even mentions ENRON and worldcom. yeah, we are going to trust companies to not cook the books and create numbers to free up their capitalization? yeah right.

  it’s like the only ones who are really complaining about the short selling freeze are hedge funds. i wonder why.

• 16 fengshui // Sep 26, 2008 at 12:23 am

  “the problem with nixing current CEO compensation for the included companies is that it is in their contracts. It will cost far more in litigation and in the end the CEO will win out”

  Wouldn’t contracts be null and void with a bail out? There is no way in hell that anyone should get millions in compensation for ruining a company and causing an economic collapse in the process. I couldn’t care less if they were thrown out onto the street without any compensation…..

• 17 fengshui // Sep 26, 2008 at 12:31 am

  “i’m sure you wouldn’t want your house now to be worth 1/3 because you want the bailout to buy the subprime mortgages for 1/3 their original value. that would be disasterous. the one thing that needs to be verified is that the govt isn’t going to buy the houses at the original prices. i personally think prices should be set at value prior to 2004 is a fair value, because that is the time period where subprime and al-a loans and securities began to grow.”

  This is where I’m a little lost. Are we referring to homes that had hyperinflated values, like in California and Florida, or are you referring to ALL homes in the US? Not all states/ areas experienced this hyperinflation.

• 18 Kristy // Sep 26, 2008 at 6:25 am

  Fengshui, Unfortunately it was not just limited to California and Florida. Your correct in that the overinflated values did not happen everywhere, however, there are still many areas that are affected, mostly along the coasts and in large cities.

  We are seeing values today in real estate as they were valued in 2004, at least where I am located. The problem is that the incomes did not keep up with the housing increases and people still bought them.

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