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Archive for Tuesday, September 30, 2008

3 Kan. House members vote against bailout

September 30, 2008

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Stock market falls on bailout failure

Lawrence residents respond to today's failure of the bank bailout bill in the House. Enlarge video

Among the Kansas delegation on Monday, the legislation to bail out the financial markets wasn't close: three House members from Kansas voted against the plan while one voted for it.

U.S. Rep. Nancy Boyda, D-Topeka, voted against it, saying that she had spoken with many economists over the past week, and they all said they weren't sure if the legislation would have worked.

Boyda, whose district includes western Lawrence, also said it was too risky for taxpayers, and failed to address basic problems in the economy.

"The only problem is that if we spent $700 billion on this option and it doesn't work, then we don't have that money to spend on doing what really needs to be done to strengthen our economy for the short and the long term," she said.

And, she said, the bill failed to establish real reforms "to curb the excesses of Wall Street that got us to this point."

Her opponent in the Nov. 4 general election, State Treasurer Lynn Jenkins, said she opposed the bill too, saying it lacked protections for taxpayers, failed to address the cause of the problem and set a bad precedent by making "it more likely for Washington to step in to 'solve the problem' in the future."

But U.S. Rep. Dennis Moore, D-Lenexa, whose district includes eastern Lawrence, voted for the bill.

He said the legislation represented a bipartisan compromise that contained taxpayer protections. Moore said Congress should remain in session until it passes a plan.

"But make no mistake, inaction is not an option," he said. "The Dow dropped 777 points and our economy hangs in the balance as the choking off of credit will increase the costs and difficulties for anyone who borrows to pay a mortgage, college tuition, buy a car, or purchase small business inventory."

Moore's opponent, Republican Nick Jordan, criticized both Moore and President Bush, who came to Kansas in May for a private fundraiser for Jordan.

"From Dennis Moore to George Bush, Washington's politics-as-usual is not getting the job done," Jordan said. Jordan said he would've voted against the bill.

Kansas' remaining House members, Jerry Moran, R-Hays, and Todd Tiahrt, R-Goddard, voted against the measure.

"While I want to take every step to avoid everyday Kansans from suffering the consequences of problems on Wall Street, I am opposed to legislation which brazenly shifts the burden of risk from Wall Street to taxpayers," Moran said.

Tiahrt called the legislation "a rush to judgment."

He added, "This is a plan crafted by Washington insiders to give money we cannot afford to greedy people who live the lifestyle of the rich and famous."

Comments

licoricepizza 6 years, 2 months ago

Moore is going to be less...a job come November if I have anything to do with it. Is my losses in my 401k going to be bailed out. NO just the greedy fat cats on wall street. And Mr. Moore wants me to pay. WRONG!!!

LogicMan 6 years, 2 months ago

"But U.S. Rep. Dennis Moore, D-Lenexa, whose district includes eastern Lawrence, voted for the bill."That's unfortunate that Mr. Moore is so out of touch with the will of the people. Toss him out! But who is Nick Jordan?

Richard Heckler 6 years, 2 months ago

The Iraq War Is Killing Our EconomyBy Robert Pollin and Heidi Garrett-Peltier, The Nation. Posted March 18, 2008.Recognizing the costs of the Iraq War is even more crucial now that the economy is facing recession.There is no longer any doubt that the Iraq War is a moral and strategic disaster for the United States. But what has not yet been fully recognized is that it has also been an economic disaster. To date, the government has spent more than $522 billion on the war, with another $70 billion already allocated for 2008.With just the amount of the Iraq budget of 2007, $138 billion, the government could instead have provided Medicaid-level health insurance for all 45 million Americans who are uninsured. What's more, we could have added 30,000 elementary and secondary schoolteachers and built 400 schools in which they could teach. And we could have provided basic home weatherization for about 1.6 million existing homes, reducing energy consumption in these homes by 30 percent.But the economic consequences of Iraq run even deeper than the squandered opportunities for vital public investments. Spending on Iraq is also a job killer. Every $1 billion spent on a combination of education, healthcare, energy conservation and infrastructure investments creates between 50 and 100 percent more jobs than the same money going to Iraq. Taking the 2007 Iraq budget of $138 billion, this means that upward of 1 million jobs were lost because the Bush Administration chose the Iraq sinkhole over public investment.Recognizing these costs of the Iraq War is even more crucial now that the economy is facing recession....More:http://www.alternet.org/waroniraq/79988/

craigers 6 years, 2 months ago

I liked the implied notion that because she talked to some economists that said they weren't sure it would work so she voted against it. What are the problems it didn't address and did she bring them up?

Mixolydian 6 years, 2 months ago

Nancy Boyda says:"The only problem is that if we spent $700 billion on this option and it doesn't work, then we don't have that money to spend on doing what really needs to be done to strengthen our economy for the short and the long term," Boyda must be talking to the wrong economic advisors and failed to read the bill she voted against. 1. It was for 250 billion. Any more would require further authorization. 2. We never had that money to spend to begin with. The treasury would have printed it and it would have been added to our national debt.Cue sappy little guitar solo..."I'm Nancy Boyda, and I don't know what I'm talking about."

Joe Hyde 6 years, 2 months ago

For the first time in months I actually felt proud of our Congress, for voting down this bailout bill.Wasn't it just last week that President Bush went on national TV and said the financial crisis had reached a point where a taxpayer-funded bailout of these financial institutions was needed? And isn't this the same president who perhaps a week before THAT was insisting publicly that the nation's economy is fundamentally strong?The bailout bill struck me as another end-of-term political rush job intended to drop a long-term burden on middle and lower-rung taxpayers. Like we'll now continue paying for the Iraq war that the president lied us into fighting shortly before his first term was about to expire?The bailout bill behaves like the war in Iraq in another way: we privatize the profits that are enriching the inside players; and if the enterprise fails, we socialize the losses to protect those inside players.When Congress got spurred hard by President Bush this time, it made me feel good when the horse didn't move. Could be the horse spotted a prairie dog hole in the grass up ahead. Or, more likely, a den of rattlesnakes.

BigDog 6 years, 2 months ago

Some members of Congress saw this coming in 2004 and tried to add better regulation of Fannie Mae and Freddie Mac.http://www.youtube.com/watch?v=hN31-nKndg8

BigDog 6 years, 2 months ago

"There is not enough protection for regular taxpayers. Estimates suggest this bailout will increase the debt ceiling by $1.3 trillion and it doesn't even restrict salaries for CEOs of the failed companies," she said.Could somebody clarify that last statement by Jenkins about CEO salaries?-----------------------------------------------Bob,The rejected piece of legislation put caps on CEO "golden parachutes" in the future but the legislation exempted those current CEOs from these limitations. So those who currently have run their companies into the ground can still walk away with the promised "golden parachute" as the taxpayer bails out their company.

Godot 6 years, 2 months ago

The failed bailout bill would have increased the national debt ceiling to $11.5 trillion.

Boston_Corbett 6 years, 2 months ago

Godot: "This problem was caused by too much regulation"Definition of idiocy.

Bob_Keeshan 6 years, 2 months ago

Well, you can criticize Boyda but what about what Lynn Jenkins had to say?http://www.kansas.com/news/local/story/545851.html"The government gets a lot more money, the CEO can get more money, and the taxpayer is left holding the bag," she said.What? If the government gets more money, how is the taxpayer left holding the bag?http://www.cjonline.com/stories/093008/kan_338409388.shtml"There is not enough protection for regular taxpayers. Estimates suggest this bailout will increase the debt ceiling by $1.3 trillion and it doesn't even restrict salaries for CEOs of the failed companies," she said.Could somebody clarify that last statement by Jenkins about CEO salaries?I thought she was a CPA... these comments make it sound like she shouldn't be balancing her family checkbook let alone voting in Congress.

Godot 6 years, 2 months ago

cont from above....Perpetual Motion MachineWith so much money from average Americans pouring in, stocks could hardly do anything else but rise. Eventually it became a self-fulfilling prophecy as money chased performance, while pushing the price up in turn. That reached its peak with the Tech Bubble, when completely worthless companies were valued in the billions. When that broke down, the Fed stepped in and created a new bubble - actually several bubbles, led by housing. The same self-reinforcing dynamic - as old as markets themselves played out again.With so much money from the masses committed to the stock and housing markets, there is considerable support for ANY measure to bail out these markets and prop up asset prices. This is the end result of individuals and pension funds refusing to settle for the smaller but steady gains from lower-risk investments. Keep in mind that not long ago, most pension and endowment type funds invested almost exclusively in bonds. For the economic importance of this, let's examine the characteristics of each class of capital:- Senior Debt (bonds or bank loans):first in line for assets and cashmust be paid or the creditor can liquidate the borrowerreliant on total company cash reserves- Junior Debt:next in line but otherwise similar to Senior Debt- Preferred Stock:3rd in line for assets and cashdividend can be suspended as stockholders CANNOT force liquidationreliant on company cash flow- Common Stock:last in line for assets and cashdividend has the least protection of any securityreliant on company profitspotential for speculative gainsSlouching towards InsolvencyOver time, asset allocations at all levels have become riskier, including pension funds. From an economic standpoint, investment results became more reliant on marginal financial activities. For example, bonds are tied to current and future corporate cash (reserves + cash flow), which tends to have a linear relationship with revenue. Preferred is reliant largely on cash flow. Common is tied to marginal profit and even to the growth rate of profit - the second and third derivatives of revenue. Investment results went from relying on the soundness of the companies, to their profitability and then to the growth rate of that profitability. Under these circumstances, it is no surprise that the emphasis shifted away from ensuring that companies remained sound and certain to survive and towards showing growth or even accelerating growth (a fourth derivative!) at almost any price.cont.

nverlost 6 years, 2 months ago

Only in Lawrence....always the republicans fault or as the first poster eluded to the Iraq war. How about a little history lesson on the just how much the democratic party may have had to do with this:http://www.youtube.com/watch?v=_MGT_cSi7Rshttp://www.viralvideochart.com/youtube/burning_down_the_house_what_caused_our_economic_crisis_v2?id=NU6fuFrdCJY

Godot 6 years, 2 months ago

It is clear that the Democrats are using this issue as a political tool. This problem was caused by too much regulation, by Congress requiring banks to make loans to people who would not otherwise qualify, by Congress' failure to understand the impact of allowing, no, requiring, Fannie and Freddie to buy the sub prime loans.Until Congress, particularly the Democrats in Congress, admit that Fannie and Freddie and "affordable housing" are the root causes of this mess, they should not be allowed to attempt to "solve" the problem. The Boyda office is unbelievable. I have written and called, and the responses are pure left wing drivel. They don't have even the slightest grasp on reality.Keep up the pressure. A "no" vote for the wrong reasons is just as dangerous as a "yes" vote. This is not over.

The_Bends 6 years, 2 months ago

The bill was flawed and should not have passed. The problems that led to the current problem cannot be fixed by a single bailout because they are simply too widespread--greed, financial illiteracy, and a glut of debt-financed consumer spending. As in other areas of the economy, there are winners and losers. Why should the case be any different on Wall Street? Wall Street is merely fear-mongering in an effort to get taxpayers to buy them the world's biggest insurance policy against bankruptcy. The firms holding these mortgage backed securities know that the sale of these assets will likely create big winners and big losers. These firms therefore opted to collude and avoid these risks altogether so as to avoid creating the big losers (bankruptcies) and big winners the market would otherwise produce.What's wrong with bankruptcy anyway, it will merely reallocate capital away from the idiots that got us into this mess to buyers who presumably have a more productive use for it.Its not that mortgage-backed securities are worthless, it's that Wall Street is irrationally bearish right now. In a very real sense, this crisis is all a product of our imagination-->http://www.cnn.com/2008/POLITICS/09/29/miron.bailout/index.html

TopJayhawk 6 years, 2 months ago

I too, am against this bailout. Logo, something along those lines is kinda what I was thinking too. I don't know enough about it for all the details, but yours are interesting.

Steve Jacob 6 years, 2 months ago

As I have been saying over and over, it's fine they voted against the bailout, but prepare higher unemployment and bank closings, and just wait to see September retail numbers, they will be the worst month in many many years. I'm kind of against the bailout just for the fact that everything above will happen later anyway, so we might as well get it over with.

Sigmund 6 years, 2 months ago

Jeffrey A. Miron is senior lecturer in economics at Harvard University. A Libertarian, he was one of 166 academic economists who signed a letter to congressional leaders last week opposing the government bailout plan."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.""This subprime lending was more than a minor relaxation of existing credit guidelines. This lending was a wholesale abandonment of reasonable lending practices in which borrowers with poor credit characteristics got mortgages they were ill-equipped to handle."http://www.cnn.com/2008/POLITICS/09/29/miron.bailout/index.html?iref=mpstoryview"Commentary: Bankruptcy, not bailout, is the right answer", CNNPolitics, By Jeffrey A. MironThis isn't/wasn't a Wall Street greed issue, this is a failed government social program that spread its toxin throughout the financial environment. Continuing the failed Freddie and Fannie policies of the past (Bailout) is NOT the answer. Bankruptcy for Freddie and Fannie and other bad actors is.

mrkuwick 6 years, 2 months ago

Come on guys, read between the lines. This deal was brokered by the Democratic and Republican caucuses and each group was supposed to deliver a certain amount of votes so neither party who have to take ownership of this bill. The fact that Moore voted yes and Boyda voted no just reflects that Moore is more secure in his election bid so the Dems could deliver his yes vote and allow Boyda political cover to vote no since she is in a tighter race.

Godot 6 years, 2 months ago

Hedge funds are sitting on $600 Billion in cash. Looks like they expect a few withdrawals. Or, they are waiting for the market to crash so they can sweep in and buy, buy, buy.On CNBC, someone on the trading floor this morning said that the Dems and the White House were worried that the market might recover today. They want the market to tank in order to create a sense of urgency to get the treasonous bailout bill passed.

lee66049 6 years, 2 months ago

logrithmic I don't really know that much about economics so I will defer to you. Why did you not mention the Clinton years as it relates to deficit spending backed by loans from China? Everything I read about Bill Clinton says "Budgeted Surplus" meaning the surplus never existed it was only budgeted in the income statement. Much like a shell game.Is that the way you see it?

staff04 6 years, 2 months ago

Well BigDog, I guess some people have more respect for the requirements of other faiths than you do.If your religion required that you not work on a certain day, how would you feel if you were told that you would be fired if you didn't?

TopJayhawk 6 years, 2 months ago

Is it time to get out the pitchforks and torches yet?

lee66049 6 years, 2 months ago

Boyda was given a pass by Peloski. Little did Peloski know 95 democrats would commit mutiny. Nancy Boyda remains the poster child for a do nothing congress.

Godot 6 years, 2 months ago

The market closed up nearly 500 points today. Nancy Pelosi must be absolutely verklempt.

Godot 6 years, 2 months ago

Boston_Corbet, the definition of idiocy is a Congress that passes legislation that requires banks to lower their lending standards so that someone who makes $2400 a month can buy a $150,000 house.

Bob_Keeshan 6 years, 2 months ago

lee66049 (Anonymous) says:Boyda was given a pass by Peloski. Little did Peloski know 95 democrats would commit mutiny. Nancy Boyda remains the poster child for a do nothing congress.--------------------It should be noted that this is a false statement. The Speaker, Majority Leader, and Majority Whip promised 140 votes for the bill, and 140 Democrats voted for it.This has been widely reported. It isn't "little did she know;" to the contrary the Speaker knew precisely that 95 Democrats would "commit mutiny."Carry on.

Godot 6 years, 2 months ago

cont from above:The eventual price was to lever up companies far beyond what was prudent in the quest for "growth." It didn't matter if the growth was real or not, it just had to look real for the shareholders. Companies undermined their own capital base with stock buybacks that juiced EPS growth while consuming cash flow and in some cases requiring additional indebtedness. We pointed to this problem nearly a year ago in Tactical Nukes. The paradoxical result was a slew of companies that were "growing" rapidly but could not survive a downturn. By placing so much reliance on marginal outcomes, the system became easy to game as small movements in revenue could drive huge changes in "growth" rates. Eventually, growth became THE foundation of many investment strategies, making those folks dependent on them willing to support increasing distortions of free markets for financial gain.Those distortions have been a large part of the discussion here at Financial Jenga since the very beginning. The collapse of the illusion of growth and the economic distortions that supported it have revealed the true state of the underlying economy for all to see and it's not a pretty sight. Such are the ironic outcomes of the Universal Debt Bubble. from http://jengafinance.blogspot.com/2008/09/limits-of-optimism.html

TopJayhawk 6 years, 2 months ago

Actually, BC, Godot does have a point.I would preface what I am going to say with the caveat that blame goes to both sides of the aisle, because this was truly a bi-partisan cluster.Remember Bill Clinton and Janet Reno who were always talking about going after these "racist" banks, and "racist" loan practices. (their words not mine) And the formation of ACORN? Using the "R" word is really unfortunate, because it was really more about making otherwise unqualified low-income folks qualified.Thus was born the "no money down" and sub-prime rates etc. This was also pushed by Bush. Remember him bragging that more poor people owned homes and home ownership is at an all-time high? More of the same.And yes, they were basically forced to give these loans because if they didn't they would be persona non grata with ACORN, and their businesses would eventually fail due to not being able to borrow money etc.So, Godot is right. And it is both sides fault.

TopJayhawk 6 years, 2 months ago

Logorhythmic.Yes it was because of too much deregulation, regardless of the reasons.And yes it was a bi-partisan effort over the years.

PosseComitatus 6 years, 2 months ago

"The rank and file are usually much more primitive than we imagine. Propaganda must therefore always be essentially simple and repetitious. The most brilliant propagandist technique will yield no success unless one fundamental principle is borne in mind constantly... it must confine itself to a few points and repeat them over and over."- Joseph Goebbels, Nazi Propaganda Minister

Sigmund 6 years, 2 months ago

Here are the Democrats in 2004, staring Financial Services Committee RANKING Member Barney Frank, Gregory Meeks, Maxine Waters, Leacy Clay, Artur Davis, and Chairman and CEO Frank Raines (Obama's Economic Advisor) rejecting more regulation proposed by the Republicans and the Office of Federal Housing Enterprise Oversight.http://www.youtube.com/watch?v=3p1Wc2NFa3wNow please explain to me again how the Democrats in Congress are not to blame for the current "crisis" and the sudden media generated fear for political purposes?Good banks and businesses and the 94% of homeowners who are current on their mortgages will survive and thrive. Bad banks, mortgage fraudsters, and the 6% who bought more house than they can support will have a tough time digging themselves out. Why should the 96% of Americans who play by the rules bail them out?If you want to give $700 billion away (and I don't), then for god sake give it to the 96% of Americans, the good banks, the good businesses who have proven they can manage their own finances better than Congress, not those who have proven they can't and who attempted to game the system.

Sigmund 6 years, 2 months ago

Yeah Banks have no cash to loan that is why Citi-Bank was able to buy Wachiovia and JP Morgan was able to buy Washington Mutual. Rates have gone up for short term loans but they are out there and if your credit is trash, you may not get a loan at all.Where were all the "smart" folks preaching the collapse of Freddie and Fannie? Are they the same "smart" folks who now are predicting economic collapse without a bailout? Aren't they the same "smart" folks who now need to be bailed out?For weeks we have heard nothing of doom and gloom if a a bailout doesn't occur. We have had the briefcase chained to our wrist and the timer has read "00:00" for weeks. Yesterday the headlines screamed 700 Point Loss For the DOW!!!" Today the DOW was up nearly 500 points and markets abroad did not collapse, but hardly a word. Next Thursday is the "new final really, really, finally final" (and we mean it this time!) deadline. All this is proving is that Wall Street, the economy, and the American people can survive without government doing a damn thing.You are being played for the suckers you are with the same scare tactics that are the life blood of insurance and used car salesman worldwide. The BushCo, Paulson, Pelosi plans were crap and not even the 12 democrats on Barney Franks own "oversight" committee could hold their noses long enough to vote for it!Any new "reform" plan must have a suspension or repeal of the BushCo Sarbanes-Oxley "mark to market" provisions, Fannie and Freddie must cease to exist, and no bailout for weak banks that collapsed. Do even two out of three and I'll support the plan and any democrat or republican who votes for it. Until then, let them all fail!

staff04 6 years, 2 months ago

For someone who has NOTHING invested right now, I wanted to see this bill pass. I do not want to have to support all the people whose 401Ks tank in the coming months and years.I think it is sad that so many people cannot seem to make the connection between Wall Street and their own street. Unless you are on a government pension or plan on living on Social Security alone in your retirement, then you need to be worried that this didn't pass.This wasn't just a bailout for "Wall Street fat cats." This was a bailout for millions upon millions of people who have staked their retirement security and future on the stability of the market.

Godot 6 years, 2 months ago

As a counter balance to Merrill's left wing perspective:http://jengafinance.blogspot.com/2008/09/limits-of-optimism.htmlThe Limits of OptimismThe absurd actions of our financial authorities continue to impress with the sheer hubris and vast scale of their proposals - with today's bailout attempt being the latest and greatest of many attempts. Some of the government's contortions would be impressive even for Cirque du Soleil were they not such a blatant effort to distort the market. Our nation and the world at large seem to be living out the economic equivalent of a Kafka novel today. Yet even here we see the boundaries of government interference and the limits of (unjustified) optimism. As advocates of the free market and rule of law, we have been constantly appalled. A nominally Republican administration continually interferes with market forces and changes investment rules in the middle of the game. How did we come to such a sad pass?Like many children, yours truly had a favorite word for much of his childhood - "Why?" Eventually, I stopped bothering Mother but never stopped asking the question. It is particularly pertinent now. How did we put ourselves in a position where using tax money to subsidize Wall Street's losses could even be considered? Well, the stock market is now considered key to the retirement of many Americans.Why?Er, most Americans now have a substantial part of their pension or 401(k) invested in stocks.Why?Well, the higher average rate of return on stocks allows us to say that retirement is fully funded with less up-front investment. This is especially important for corporate and government pension plans. For individuals it allows hope of the big score and a cushy retirement.Did the pension managers decide that was a good idea, themselves?Umm, not really. Remember, stocks are not bought - they are sold. Some smart salesmen on Wall Street started to push this in the late 1980s, just as the last people who lived through the Great Depression were retiring. But what about the higher risk?The salesmen could point to the superior long-term returns from equity, while glossing over the risk and the folks who remembered the risk in very visceral ways were gone. Even so, many pension managers objected but were overruled by their bosses who wanted to lay out less money for pensions so they could spend it elsewhere (government) or report higher earnings (corporate).What about 401(k) plans?The long bull market convinced many individuals that there was little risk in stocks. They certainly had produced high returns. Many people hitched their wagon the Wall Street.cont.....

Hawkman 6 years, 2 months ago

Thanks, Dennis Moore.....you tried to help us out but the stupid president and his party just lost me over $80,000 in retirement money. Get these yahoo republicians OUT OF OFFICE NOW!!!

dipweed 6 years, 2 months ago

The same corporate interests that profited from the closing of U.S. factories, the movement of millions of jobs out of America, the off-shoring of profits, the out-sourcing of workers, the crushing of pension funds, the knocking down of wages, the cancellation of health care benefits, the sub-prime lending are now rushing to Washington to get money to protect themselves.

TopJayhawk 6 years, 2 months ago

Hawkman, I feel for you. But you gotta sit tight now. If you invested in good stocks, they should come back. If not, well, my inheratance may well be gone too.

lee66049 6 years, 2 months ago

Bob......what? 95 democrats voted against the bill. The democrats could have passed the bill all by themselves. They control the house. Boyda was given a pass to vote no, along with 15 other democratic congress persons up for re-election. Peloski blew it, which is indicative of the last two years she has run the house. Who will ever forget the speech she gave about lowering the price of gas as she took office?

Confrontation 6 years, 2 months ago

licoricepizza (Anonymous) says: "Moore is going to be less:a job come November if I have anything to do with it."Oooooh, I bet he's so scared!

Sigmund 6 years, 2 months ago

Jeffrey A. Miron is senior lecturer in economics at Harvard University. A Libertarian, he was one of 166 academic economists who signed a letter to congressional leaders last week *opposing the government bailout plan."The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government.""The obvious alternative to a bailout is letting troubled financial institutions declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company.""Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable."http://www.cnn.com/2008/POLITICS/09/29/miron.bailout/index.html?iref=mpstoryview"Commentary: Bankruptcy, not bailout, is the right answer", CNNPolitics, By Jeffrey A. MironLet the bad fail. Do NOT bailout Freddie, Fannie, or the Banks that took excessive risks! Jeffrey A. Miron and 166 other economist have some idea of what they are talking about.

Sigmund 6 years, 2 months ago

Oh, and BTW merrill, the war in Iraq did not cause the Fannie and Freddie subprime mortgage crisis no matter how much you woulod like to believe it did.

Godot 6 years, 2 months ago

Truth squad takes on Logrithmic.Oversight of the Federal Reserve is Congress' job.Congress gave the Treasury Secretary, the source of the $630 Billion that was injected into the banking system yesterday, the authority to spend as much as he wants for any reason, without having to justify it to Congress, and without the permission of Congress. They did this with HR 3221, which was authored by Democrats, opposed by Bush, then modified again and then passed by by both the Senate and House. Then Bush signed it, much to his disgrace.With this bill, Congress abdicated their responsibilty to make budgetary and spending decisions. They gave Paulson a "bazooka" that, in testimony before Congress, he claimed he would not have to use.He has since used his "bazooka" to take over Fannie and Freddie, to bail out AIG and to inject billions and billions of dollars into the banking system.Every person in Congress who voted in favor of that bill, as well as President Bush, is guilty of a terrible transgression on the American taxpayer.What I want to know is, why has this unconstitutional bill not been brought before the Supreme Court so that it can be shot down?

lee66049 6 years, 2 months ago

Godot great point....wasn't that long ago the people that supported this bill were hollering about the national debit. Nancy Peloski for one.

kmat 6 years, 2 months ago

Most of you have no idea what you talking about. It's to be expected because very few actually understand the credit market. This bail out is about the ability of banks to loan each other money. they have so much money tied up in bad loans (many banks holding these loans weren't the originators, they bought bundled packages of what were supposed to be good debt - this happens all the time). Now they are sitting on this bad debt and don't have cash available. The problem is that while regular banks have always had govt regulations they must follow, the brokers were given a free pass by the republicans this decade and did a bunch of bad loans then sold them right out, making sure they didn't hold onto the risk.Do a little studying on business lines of credit and how banks loan each other money, then you'll understand why a bail out is needed. I wasn't overly fond of this plan, but an infusion of money is desperately needed so banks can continue to lend to each other and lines of credit can stay open for businesses so they can meet payroll and pay their bills.The losses on Wall Street yesterday were nothing. Just wait.

BigDog 6 years, 2 months ago

If this has created such dire need ..... why did Congress break until Thursday? And don't say it was because of the Jewish New Year ...... because I would expect them to be there on any holiday if the problem is so great .... whether it be a Christian holiday, Jewish holiday, Buddhist holiday or a holiday not associated with religion.If this is such a problem and Congress is breaking instead of crafting a solution .... they ought to all be tossed out of office.

Laura Wilson 6 years, 2 months ago

I just love how some people on this forum trash Boyda for voting 'no' and don't mention at all the two republican reps from Kansas who also voted 'no'. I guess their votes didn't count or something? Maybe they were tricked into voting 'no'?If you're going to tar one person with that brush, you have to tar them all.

Bud Stagg 6 years, 2 months ago

My fear is that there are too many people in "the know" who are really scared. All of you experts that are against it do not have any real knowledge of this situation, they do. We have to take action and do something quick or the domino effect will impact us all. For Example, I'm trying to get a business loan right now to take on a new project and the banks are not loaning money. I have great assets and credit. They are afraid if the economy tanks, my retail company will tank too. They are right. If I don't get this loan, then the loss of this project will cost this community jobs and tax income. If the economy tanks, then we will cut jobs too.

Sigmund 6 years, 2 months ago

kmat (Anonymous) says: "Shewman - I'm married to a credit analyst." Please tell us what your spouse has to say about the ADDITIONAL regulation of Freddie and Fannie proposed by the republicans in 2004, or the current proposals to do away with BushCo's REGULATIONS of the Sarbanes-Oxley Act of 2002 requiring "mark to market?" http://en.wikipedia.org/wiki/Sarbanes-Oxley_ActI too know a few financial analysts as well as a few economist and I am curious as to what SPECIFIC regulations s/he opposes and which s/he supports. I wish my life were so simple that "all regulations," or all republicans, or all democrats, were good or bad. Then I too could live in the black and white world of ideological sock puppets and not have to deal with all those shades of gray in the real world.

Richard Heckler 6 years, 2 months ago

AMY GOODMAN: Explain. What would Warren Buffett do now, if it was-if he was representing the taxpayers, and they were shaping this bill?ROBERT JOHNSON: Well, the taxpayers have the strong hand. They've got the money. The Wall Street firms are weak. So he would go in. He would take control of the company, basically diminishing or wiping out the equity. He would probably ask for the resignation of top officials. He might not accept every resignation letter. He would restructure the company. He would sell off some assets. And then, when the company regained its health a few years down the road, he could sell those preferred stock shares back into the market and recoup the money for his investors, meaning, in this case, the US taxpayer.AMY GOODMAN: In other words, he would restructure Wall Street.ROBERT JOHNSON: That's correct.AMY GOODMAN: And what would happen, for example, with CEO pay? Do you think this is relevant here? It's certainly a populist, popular issue.ROBERT JOHNSON: CEO pay would probably reflect the quality of performance that we've seen in recent months.AMY GOODMAN: Meaning?ROBERT JOHNSON: So, diminished violently and appropriately.AMY GOODMAN: We're going to go to break, then we'll come back. Our guest is the former chief economist for the Senate Banking Committee, Robert Johnson, and we are also joined in Boston by Bruce Marks, who is founder and CEO of the Neighborhood Assistance Corporation of America. This is Democracy Now! Back in a minute.http://www.democracynow.org/2008/9/30/bridge_loan_to_nowhere_house_rejects

joshupetersen 6 years, 2 months ago

Neither democrats or republicans are to blame. It's the faulty system that they're both trying to work within the constraints of.The current system CAN'T work in the long run.

Godot 6 years, 2 months ago

I wonder if Thomas Frank is allowed to attend any of his parents' friends' parties anymore.

Sigmund 6 years, 2 months ago

logrithmic, I am not whining, I am responding to your Marxist populist rhetoric nonsense and trying to show who is to blame, including the democratic leaderships sudden support of BushCo's plan. The fundamentals of our economy are strong, we have survived both democrats and republican mismanagement and we are still alive and kicking. The price of a barrel of oil is dropping dramatically and the dollar had its largest one day gain against the Euro yesterday. The fundamentals are fine an d getting better, it is Fannie and Freddie, government sponsored enterprises that are causing any problems. Name another country whose economy could have survived such negligence, both parties presidential candidates (dweedledee and dweedledumber, your choice) and still function normally? The financial markets are NOT the economy, just one part of the "economy," and even they appear to have recovering!Rushing into ill conceived legislation $700 billion foisted by Pelosi, Frank, Paulson, and BushCo was NOT the answer. Thank god for the democrats and republicans who reject this "cure" that was much worse than the disease!Needless regulation is costly and NOT necessary. Good regulation, like that in 2004, needs to be supported by both republicans and democrats and not used to make political points in some sick inside the Beltway game of gotcha. Still all the hysteria over Fannie and Freddie has allowed the Congressional ban on offshore drilling to die and that too will lead to lower oil prices further improving the fundamentals.

kmat 6 years, 2 months ago

Shewman - I'm married to a credit analyst. He does this stuff for a living (not the crooked cr*p that got us into this mess). Unless your career is in the industry, I do know more than you about the subject and have a lot more at stake than those who don't work in the industry.Deregulation is what did this to us. Who's responsible - republicans.

Mixolydian 6 years, 2 months ago

And for those who say it was republican deregulation that caused this mess I have yet to see anyone point to a federal regulation that was in effect and then repealed by a republican administration and then tie that repeal directly into the crisis we face today.Can't be done.On the other hand I can point to time and time and time again when republicans sought greater oversight and control over Fannie Mae and Freddie Mac and the mortgage industry. That's the basis for the republicans share of the blame here...failure to slap the democrats down on their opposition to regulatory oversight.

joshupetersen 6 years, 2 months ago

The simple solution is we put in the Heinlein Heritage check act suggested in heinlein's book "For Us, the Living". In the heritage check system, there's a very interesting method by which the government takes over the federal reserve (currently, the federal reserve is a private organization), drops taxes, and gives money to the taxpayers, as well a few other interesting turns. Mathmatically, the way it works out, is the average person gets more money, the value of that same money goes up (inflation pretty much stops), and instead of the U.S. government being funded through taxpayers, it's funded by strength of the U.S. economy (in layman's terms, the government ends up effectively having its own version of the stock market used to fund it, but a stock market that will be more reliable due to stronger citizen economic base.)Mathematically, it's shown to work (unlike our current system, which is mathematically shown will fail repeatedly, as is evidenced by recent events.)

Mixolydian 6 years, 2 months ago

I didn't trash Boyda for voting no (I favored the plan and think highly of Moore for voting for it though) I pointed out the flaws in her statement on why she voted no.Most importantly I pointed out how very very annoying her little three note guitar solo is that plays on the radio and TV every 2 minutes during her campaign ads. uuuggghhhh.

Godot 6 years, 2 months ago

Great post, Sigmund. I would add that any reform must take back the unconstitutional power that was given to the Secretary of the Treasury last July.

LiberalDude 6 years, 2 months ago

The Bush/McCain bailout plan is crap. I'm glad that it failed. Thank you Nancy Pelosi!!! (tic)

twinetowngirl 6 years, 2 months ago

Go to Daveramsey.com and see his imput.The Common Sense FixYears of bad decisions and stupid mistakes have created an economic nightmare in this country,but $700 billion in new debt is not the answer. As a tax-paying American citizen, I will not supportany congressperson who votes to implement such a policy. Instead, I submit the following threestepCommon Sense Plan.I. INSURANCEa. Insure the subprime bonds/mortgages with an underlying FHA-type insurance.Government-insured and backed loans would have an instant market all over theworld, creating immediate and needed liquidity.b. In order for a company to accept the government-backed insurance, they must do twothings:1. Rewrite any mortgage that is more than three months delinquent to a6% fixed-rate mortgage.a. Roll all back payments with no late fees or legal costs into thebalance. This brings homeowners current and allows them achance to keep their homes.b. Cancel all prepayment penalties to encourage refinancing orthe sale of the property to pay off the bad loan. In the event offoreclosure or short sale, the borrower will not be held liablefor any deficit balance. FHA does this now, and thatencourages mortgage companies to go the extra mile whileworking with the borrower-again limiting foreclosures andruined lives.2. Cancel ALL golden parachutes of EXISTING and FUTURE CEOs andexecutive team members as long as the company holds thesegovernment-insured bonds/mortgages. This keeps underperformingexecutives from being paid when they don't do their jobs.c. This backstop will cost less than $50 billion-a small fraction of the current proposal.II. MARK TO MARKETa. Remove mark to market accounting rules for two years on only subprime Tier IIIbonds/mortgages. This keeps companies from being forced to artificially mark downbonds/mortgages below the value of the underlying mortgages and real estate.b. This move creates patience in the market and has an immediate stabilizing effect onfailing and ailing banks-and it costs the taxpayer nothing.III. CAPITAL GAINS TAXa. Remove the capital gains tax completely. Investors will flood the real estate and stockmarket in search of tax-free profits, creating tremendous-and immediate-liquidity inthe markets. Again, this costs the taxpayer nothing.b. This move will be seen as a lightning rod politically because many will say it is helpingthe rich. The truth is the rich will benefit, but it will be their money that stimulates theeconomy. This will enable all Americans to have more stable jobs and retirementinvestments that go up instead of down.This is not a time for envy, and it's not a time for politics. It's time for all of us, as Americans, tostand up, speak out, and fix this mess.

Godot 6 years, 2 months ago

Windlass lives on a crazy ship of her own making - she has to make up stuff that people did not say, and then attribute it to them in order to make any sense of her made up world.

PosseComitatus 6 years, 2 months ago

"It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes." -- Andrew Jackson

Godot 6 years, 2 months ago

According to Congress.org, Nancy Boyda voted NAY on the bill to provide relief from the Alternative Minimum Tax.Now you know just what a friend ole Nancy Boyda is to the average middle class taxpayer. She wants to stick it to you just because you own property and take advantage of tax sheltered savings.

Godot 6 years, 2 months ago

Excellent ideas from Dave Ramsey. I will add one more:Allow tax free and penalty free withdrawals from IRA's, 401-Ks, 403-B's and 457's if they are used to pay down the mortgage on a primary residence. This will transfer dollars from Wallstreet to the banks, and will reward responsible savers.

Godot 6 years, 2 months ago

This is the beginning of our salvation: Doctor asks federal judge to issue restraining order stopping bailout bill10/10/2008 2:11 PMBy Steve GonzalezEAST ST. LOUIS-A Belleville doctor is asking a federal judge to bar President George W. Bush from enforcing the congressionally-approved financial industry bailout bill.Dr. Randy J. Jung filed the request for a restraining order Friday, arguing Congress and Bush exceeded their constitutional authority when passing H.R. 1424, otherwise known as the bailout bill."In the spirit of the Magna Carta where the King and government are required to follow their own laws; and in the honorable tradition of the Judicial Branch of government providing checks and balances for excesses of Congress and/or the President, I would like to plead that a restraining order be issued preventing the 'bailout bill' from being enforced until after a federal judge has ruled on the above maters which strongly indicate that the Congress and President have exceeded their Constitutional authority passing H.R. 1424 as amended," the complaint states."After reading Article I, Section 8 of the U.S. Constitution, I do not see where Congress has the legal authority to deprive its citizens of property in the form of taxation to effect the above act and bailout the troubled financial district," the complaint also states.Jung argues since the bailout bill is an attachment to mental health legislation, it makes it "extra topical to the spirit and scope of the mental health act" and is an effort to "get around the fact that the U.S. Senate is the originator of a bill raising revenue of $700 billion, which exceeds the rights of the US Senate as indicated in Article I, section 7."The U.S. Senate has taken away the constitutional right of the House of Representatives to originate bills for raising revenue; and is assuming that function for the Senate," the complaint states."Sometimes, children are abused by their parent, relative, acquaintance, or stranger," the complaint also states. "This abuse generally occurs in a milieu of neglect where other adults fail to allege that the perpetrator has exceeded his rights; and exercised his will over the child simply because he is powerful enough to do so."U.S. District Judge Michael Reagan and Magistrate Clifford Proud have been assigned to the case. No hearings have yet been scheduled.

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