I see the media is reporting tonight that the bailout is dead for now. This whole damn is so disturbing. Key Democrats in the US Congress like Senator Christopher Dodd and Representative Barney Frank seem to be all for it with conditions. Jim Cramer of CNBC said this morning on the Today program that without it, we could have a “depression”. My fear is that if we don’t do something, it’s going to be bad news for several years. But at the same time, I cannot trust the investment banking sector at all. And I feel like they are getting off scot free. They created this nightmare and they seemed more concerned about how they can profit from this mess. As for Treasury Sec. Henry Paulson, I see his as part of the problem and not the solution. Too, the House Republicans want to capital gains cut taxes as part of their solution to this crisis. Typical mind bending bullshit from the GOP.

I'm starting to get curious about which companies that remain standing might be considered in danger of going under without a government bailout? Wouldn't it make some sense to declare an audit of any company worth more than - I don't know, $10B, that is remotely in the banking or lending business? Can't the US Congress pass a law and Bush sign a law compelling companies to submit to an audit?

Otherwise, it seems like we are all speculating with little public info about the state of companies that haven't already fallen, and someone simply pulled this $700B number out their butt because it sounded "big." If you are going to do this systematically, you'd look at every institution. There aren't hundreds of them in this category surely.

What am I missing here?

Andrew

Well there is a split in the GOP over all this. The Ultra Conservatives want this to be something like a govt Treasury Loan , very low interest something like 2%. Banks get to borrow the money and fix their own assets. Loans fully recoverable , US GOVT owns no stock. The bank either makes it, or doesnt and has to pay the money back.

The other GOP and Democrat financial wizards dont think that will work because they think it will result in something like what happened in Japan some years ago when their govt had to bail out a bunch of their investment Banks. Japanese Markets took 10 years to recover because the investment banks used the money first of all to leverage their stocks to play the markets , THEN fix their bad paper...it worked but it took 10 years and there were a lot of problems for a lot of people and it affected everyone in Japan.

It's ok to admit that I am kinda lost on all this, right?

I think its ok to admit being confused. If a solution doesn't make sense to a layperson then its probably a bad idea.

I think we're through letting people get away scot-free. We're also not giving anybody a blank check either.

I think we all are, really....Hell ! Even the most ardent Wall Steeter' pundit or who ever they are experts are puzzled at least over some of this new Frankensteinian monstrosity about to become a new Govt within a Govt. They dont even know if it will work, ultimately. But something has to be done and pretty fast.

" But something has to be done and pretty fast."

Because if we don't do something fast, what will happen? What will be prevented?

OK - for those who understand some of this - and I THINK I get some too - here are a few questions;

The money. The ACTUAL money. From where will it come? It's not like we have a surplus of cash. We would borrow it, correct? From whom? Against what?

Who would get it? Specifically.

What would they actually do with it? How would they physically dole it out? It would be spent on what?

Where will this money land when it's all signed off on and approved?

There is some speculation that the top companies purchase most of the US Treasury securities, then sell them to domestic customers.

If they have a problem, the treasury has a problem!

The FED can always print more money, but with so many things at risk, I don't think anybody wants to see the dollar diluted, so that's out.

The budget deficit this year was some 400 Billion dollars. Next year, it might exceed a Trillion dollars. Subtract the two and you get somewhere around 700 billion dollars.

Perhaps this is about financing the government itself! Maybe credit is tough to get because the treasury is consuming all of it through over spending.

Could be then that Paulson wants to give this money to the companies, so they can sell them to finance the treasury?

This kind of thing does make me wonder why they have hammered and hammered on Social Security funds. The government needs credit and needs it badly!

So a pile of money like that isn't spent, like I thought it would be. It's used to secure credit equal to several times it's value.

This kind of high risk / high reward behavior is how Paulson grew Goldman Sachs.

http://www.businessweek.com/magazine/content/06_24/b3988001.htm

That's an older article, but it's telling in the parallels to what is going on right now.

I think big tax increases are coming. There's just no other way to raise money. How long can you simply keep borrowing?

I've heard a number of proposals. One by Or Rep. Peter Defazio is to bring back a tax on wall street transactions. We had this tax on and off until 1969. He estimates it could raise $150B/year.

But surely the wealthy are going to get soaked in new taxes. As in some ways is their due: who benefited the most in the last eight years? They did. The rich have gotten richer. Slap some tax on 'em and they'll still be rich.

Andrew

I am starting to think that there may be some threats against certain individuals lives here. It is not going to be a situation where people are jumping out of windows but rather a mob mentality.

It seems as if we are fucked no matter what DC comes up with.

And I fully realize that I come across alot here as a doom and gloom type of poster but I never really thought we would see a depression in this country in my lifetime. War yes but a complete and utter meltdown of not only our economy but our government as well I just didn't expect it to be this bad.

For the life of me, I can't see how in good conscience John McCain can run around this country telling the American people he'll keep the Bush tax cuts in place while balancing the federal budget in four years plus continue paying $12 billion a month for the Iraq War. This doesn’t even begin to factor the cost of a bailout of Wall Street.

As for taxes, the House GOP caucus wants to cut capital gains as part of their plan to bail out Wall Street.

I'm thinking right now is a good reason to pack up and leave Iraq. Surely the most hawkest of Hawks may even entertain this idea.

Problem with a consensus on the plan. House and congress has too many LAWYERS trying to make economic decisions. This shows a blatant shortcoming in our system, and cries out for a true "REPRESENTITIVE GOVERNMENT". There is a need for a broader cross section of the population. They truly are LAWMAKERS, and weak on other issues...

Making laws and regulations, they do well.
budget finance and infrastructure issues? Not so good.

The Republican bastards created the problem and to add insult to injury, they are holding up implementing a solution because they wish to somehow take credit for the save.

This is totally ridiculous.

After the final bell on the solution, there will be one more rally on Wall Street and then all the other problems will start to creep back in.

It's not just about mortgages. It's about an administration that just prints money to make their own compadres wealthy.

Turn this car around.

....Turn this car around....

let me out here, I'll walk the rest of the way.

Screw the banks and financials really stimulate the economy and give the lowest 50 million taxpayers 14 thousand dollars each. That ought to stimulate the economy whether they spend it or bank it. Then you tax the 14k at the lowest rate and get the infusion into the treasury. Win for the people, win for the fed tax system, win for local economy and banks, LOSS for BIG BANKS and FINANCIALS.....