Another troubled Friday!
If they don't work out the bailout bill and it doesn't look like they will....by morning, this fickle market may lose all today's rally and more.
We are very close to a real disaster.
I am looking forward to a collapse...It is what this country needs... As long as we haul those responsible away in chains...
Well, they are coming faster now. Thursday night - buh-bye WaMu - bought by JP Morgan. Say, wasn't JP a MAJOR player in the depression, buying former competitors left & right? And WaMu, largest bank to have ever failed in the US. Who would have thought?
and now...
"Dear Friends,
Whenever a Great Bipartisan Consensus is announced, and a compliant media assures everyone that the wondrous actions of our wise leaders are being taken for our own good, you can know with absolute certainty that disaster is about to strike.
The events of the past week are no exception.
The bailout package that is about to be rammed down Congress' throat is not just economically foolish. It is downright sinister. It makes a mockery of our Constitution, which our leaders should never again bother pretending is still in effect. It promises the American people a never-ending nightmare of ever-greater debt liabilities they will have to shoulder. Two weeks ago, financial analyst Jim Rogers said the bailout of Fannie Mae and Freddie Mac made America more communist than China! "This is welfare for the rich," he said. "This is socialism for the rich. It's bailing out the financiers, the banks, the Wall Streeters."
That describes the current bailout package to a T. And we're being told it's unavoidable.
The claim that the market caused all this is so staggeringly foolish that only politicians and the media could pretend to believe it. But that has become the conventional wisdom, with the desired result that those responsible for the credit bubble and its predictable consequences - predictable, that is, to those who understand sound, Austrian economics - are being let off the hook.. The Federal Reserve System is actually positioning itself as the savior, rather than the culprit, in this mess!
• The Treasury Secretary is authorized to purchase up to $700 billion in mortgage-related assets at any one time. That means $700 billion is only the very beginning of what will hit us.
• Financial institutions are "designated as financial agents of the Government." This is the New Deal to end all New Deals.
• Then there's this: "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." Translation: the Secretary can buy up whatever junk debt he wants to, burden the American people with it, and be subject to no one in the process.
There goes your country.
Even some so-called free-market economists are calling all this "sadly necessary." Sad, yes. Necessary? Don't make me laugh.
Our one-party system is complicit in yet another crime against the American people. The two major party candidates for president themselves initially indicated their strong support for bailouts of this kind - another example of the big choice we're supposedly presented with this November: yes or yes. Now, with a backlash brewing, they're not quite sure what their views are. A sad display, really.
Although the present bailout package is almost certainly not the end of the political atrocities we'll witness in connection with the crisis, time is short. Congress may vote as soon as tomorrow. With a Rasmussen poll finding support for the bailout at an anemic seven percent, some members of Congress are afraid to vote for it. Call them! Let them hear from you! Tell them you will never vote for anyone who supports this atrocity.
The issue boils down to this: do we care about freedom? Do we care about responsibility and accountability? Do we care that our government and media have been bought and paid for? Do we care that average Americans are about to be looted in order to subsidize the fattest of cats on Wall Street and in government? Do we care?
When the chips are down, will we stand up and fight, even if it means standing up against every stripe of fashionable opinion in politics and the media?
Times like these have a way of telling us what kind of a people we are, and what kind of country we shall be.
In liberty,
Ron Paul"
If this bailout scheme passes there will be an unending stream of banks, insurance companies, credit card companies et al – all Too Big To Fail. You, your children and their children will pay for this. It will supersede all other public spending.
The passage of this proposal Will Not avoid recession at all. It Will Not "unclog credit lines". The housing market as it has been known for the past five years or so, Will Not return.
If you have any belief that you can impact the political process, you Must Contact your congressperson now expressing your outrage at this bailout scheme. Contact info available at:
http://www.visi.com/juan/congress/
I would suggest calling followed by fax – the email is only available through laboriously filling out forms.
Is there any wonder now why Paulson left Goldman Sachs and a $38 Million salary to become Treasury Secretary?
This must be stopped.
Call now.
Yes, I ask everyone to call and write as well. Call then hang up and call again from a different phone. Call the Washington office and the local one. Let them know that this is a terrible idea and you will remember their actions.
That is the only thing they understand. I have read and heard that these congressional offices are getting hammered 300 to 1 against the bill. It is working. keep the heat up.
Amen to that!
have phone-will call(already did)
I called a whole bunch of em!
"Dear Friends:
The financial meltdown the economists of the Austrian School predicted has arrived.
We are in this crisis because of an excess of artificially created credit at the hands of the Federal Reserve System. The solution being proposed? More artificial credit by the Federal Reserve. No liquidation of bad debt and malinvestment is to be allowed. By doing more of the same, we will only continue and intensify the distortions in our economy - all the capital misallocation, all the malinvestment - and prevent the market's attempt to re-establish rational pricing of houses and other assets.
Last night the president addressed the nation about the financial crisis. There is no point in going through his remarks line by line, since I'd only be repeating what I've been saying over and over - not just for the past several days, but for years and even decades.
Still, at least a few observations are necessary.
The president assures us that his administration "is working with Congress to address the root cause behind much of the instability in our markets." Care to take a guess at whether the Federal Reserve and its money creation spree were even mentioned?
We are told that "low interest rates" led to excessive borrowing, but we are not told how these low interest rates came about. They were a deliberate policy of the Federal Reserve. As always, artificially low interest rates distort the market. Entrepreneurs engage in malinvestments - investments that do not make sense in light of current resource availability, that occur in more temporally remote stages of the capital structure than the pattern of consumer demand can support, and that would not have been made at all if the interest rate had been permitted to tell the truth instead of being toyed with by the Fed.
Not a word about any of that, of course, because Americans might then discover how the great wise men in Washington caused this great debacle. Better to keep scapegoating the mortgage industry or "wildcat capitalism" (as if we actually have a pure free market!).
Speaking about Fannie Mae and Freddie Mac, the president said: "Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk."
Doesn't that prove the foolishness of chartering Fannie and Freddie in the first place? Doesn't that suggest that maybe, just maybe, government may have contributed to this mess? And of course, by bailing out Fannie and Freddie, hasn't the federal government shown that the "many" who "believed they were guaranteed by the federal government" were in fact correct?
Then come the scare tactics. If we don't give dictatorial powers to the Treasury Secretary "the stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet." Left unsaid, naturally, is that with the bailout and all the money and credit that must be produced out of thin air to fund it, the value of your retirement account will drop anyway, because the value of the dollar will suffer a precipitous decline. As for home prices, they are obviously much too high, and supply and demand cannot equilibrate if government insists on propping them up.
It's the same destructive strategy that government tried during the Great Depression: prop up prices at all costs. The Depression went on for over a decade. On the other hand, when liquidation was allowed to occur in the equally devastating downturn of 1921, the economy recovered within less than a year.
The president also tells us that Senators McCain and Obama will join him at the White House today in order to figure out how to get the bipartisan bailout passed. The two senators would do their country much more good if they stayed on the campaign trail debating who the bigger celebrity is, or whatever it is that occupies their attention these days.
F.A. Hayek won the Nobel Prize for showing how central banks' manipulation of interest rates creates the boom-bust cycle with which we are sadly familiar. In 1932, in the depths of the Great Depression, he described the foolish policies being pursued in his day - and which are being proposed, just as destructively, in our own:
Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion.
continued -
- continued
To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection - a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end... It is probably to this experiment, together with the attempts to prevent liquidation once the crisis had come, that we owe the exceptional severity and duration of the depression.
The only thing we learn from history, I am afraid, is that we do not learn from history.
The very people who have spent the past several years assuring us that the economy is fundamentally sound, and who themselves foolishly cheered the extension of all these novel kinds of mortgages, are the ones who now claim to be the experts who will restore prosperity! Just how spectacularly wrong, how utterly without a clue, does someone have to be before his expert status is called into question?
Oh, and did you notice that the bailout is now being called a "rescue plan"? I guess "bailout" wasn't sitting too well with the American people.
The very people who with somber faces tell us of their deep concern for the spread of democracy around the world are the ones most insistent on forcing a bill through Congress that the American people overwhelmingly oppose. The very fact that some of you seem to think you're supposed to have a voice in all this actually seems to annoy them.
I continue to urge you to contact your representatives and give them a piece of your mind. I myself am doing everything I can to promote the correct point of view on the crisis. Be sure also to educate yourselves on these subjects - the Campaign for Liberty blog is an excellent place to start. Read the posts, ask questions in the comment section, and learn.
H.G. Wells once said that civilization was in a race between education and catastrophe. Let us learn the truth and spread it as far and wide as our circumstances allow. For the truth is the greatest weapon we have.
In liberty,
Ron Paul"
Think you know who to blame this mess on? For once it isn't Bush.
take 10 minutes to watch:
http://www.youtube.com/watch?v=H5tZc8oH--o
you may be astonished who the culprits are
Sorry Mike but they are all in on it. Both parties are guilty because there is really only one party.
Yup - the republicrats... or the war party -- take your pick. Impeachment is off the table -- thanks Nancy. Proof of a one party system.
I agree there is complicity on both sides of the aisle. I only wished to point out that the democrats bleating that this is due to 8 years of Bush was simply not supported by the facts. I suppose they have assumed the only defense they have in this deal is a strong offense.
Everyone is on the bandwagon now. Here's what is supposedly going to be the bill they send to the Pres.
http://i.cdn.turner.com/cnn/2008/images/09/28/ayo08c04_xml.pdf
Damn. They could have taken that 700 bill and sent equal portions to every citizen. Then the credit markets and the wolves could go pound sand, and the money would be back in the economy.
I know, simplistic, way to easy....and none of the GOB's would profit.
Oh well...... >:(
You got it, Considerations -- like the stimulus check only they wouldn't come to get it back.
They have profited and want to continue to do so - dropping the middle class - lower echelon to be homeless street people.
It was actually due to decades of bankers, politicians and corruption.
Whew, that's a long document - I read several pages... what worries me is all the power they are still giving the Sec of the Treasury - Paulson - I think he needs total oversite, himself, in carrying out the plans. Did you read it all Considerations? Did they say anything about the financial institutions that are being helped have to pay interest? Or are we still going to bail them out at premium rates & pay the interest on it also... doesn't make sense to me... d*
I think they'll be back for more. This is the end of the beginning.
I think the whole show about resistance is just to play up to voters. 90% of the feedback they got from people like us is against it, but they have to mark their scorecards, saying they put up a good fight, and built in protections for us, but the American sheeple just "don't understand the details and the consequences"....and since THEY do (more BS), they have to vote for the bailout.
I don't know about you, but I think if they get away with this, the door is open for more, and if this works as an Rx for calming things down, it will be too easy to use it again.
Remember the S&L bailout, and the decade of leveraged buyouts. I remember the revelations I had then, I learned a few things, being in commercial credit at the time. One was that it seemed that there was a shift in the way many business people were thinking. If they borrowed a million dollars in the 70's, they were a million dollars in debt, but if they borrowed a million dollars in the 90's, they were worth a million. Another was that they didn't feel guilty about doing wrong, they felt guilty about getting caught. Maybe it was just me growing up and seeing more, but at the time, it felt like a shift in the way I saw people thinking about business.
I remember after 9/11, all the talk about how it was important that the "american people" feel safe. My immediate reaction was that I don't give a damn about "feeling safe", I want to BE safe.
Credit used to be precious, hard to get, and based on mutual trust. Now it's numbers, you are a number, your credit history is a number, all mashed up together in a computer, there is no hand shake, no assessment of the decision maker's honor, no agreement to a long term relationship. If you don't see a sterling profit on the deal, bundle it up and sell the paper to a bottom feeder.
I don't think that credit cards even existed until about the 70's. If you bought a house, it was the local bank that made the loan and carried the paper. You were talking to the same person about your mortgage when you closed, and again 10 years down the road.
This, to me, looks the same. The congress isn't nearly as interested in fixing the situation as they are about wanting us and the world to BELIEVE they fixed things.
The difference in the words is small, but chilling.
I've had a little contact with the world in Washington DC. There is so much money and influence there that it is stunning, but only if you don't compare it to the world they are trying to shore up.
I figured out a while ago that the real power in this world is not politics, but money, this is just proof. The difficulty that politicians are facing is that there are more "have nots" with a vote than the "haves".
But the "haves" wield more clout because what they "have" is the money.
This is just one time when this situation is clearly visible for all to see. I'm sorry, I'm ranting and I know it. I'm just totally disgusted. I came out here to make a simple life, live quietly, and be as self sufficient as possible, while I still could. The tendrils of greed and BS have managed to find me, even here.
This is going to make it harder to get by, not just for you and me, but our kids and our grandkids. And the deed was done a long time ago, we're just seeing the invoice.
I thought I had my retirement pretty well figured out. Now I don't think so.
I'm proud of you considerations. Good rant.
This is the place to do that, and you keep surprising us with new skills and experience we haven't heard about.
You sound like me but you say it better....and you don't have the beard....
...that I know of... [crz] Shut up, Glenn....you idiot....d* heh
You don't do brain surgery I hope.... hmm
I haven't said much on this so far...
As much as I am very very much in favor of personal and corporate responsibility andf generally say let the idiots, fools, the irresponsible, the gamblers wallow in their self inflicted misfortune, this is too big. It affects all of us, even those with no loans or mortgages. I believe if the house does not get this together in a true bepartisan fashion we all stand to lose value of our homes and other real estate, we risk seeing our 401(k)'s and other investments lose much value. Etc. Etc.
I think back to the Chrysler bailout. At the time I thought it was wrong. But within three years Chrysler paid it all back with interest.
I think I'd rather gamble and give the feds a few hundreds to a couple thousand than see my property values, etc. go way far south.
Quote from: MountainDon on September 29, 2008, 08:36:55 PM
I haven't said much on this so far...
As much as I am very very much in favor of personal and corporate responsibility andf generally say let the idiots, fools, the irresponsible, the gamblers wallow in their self inflicted misfortune, this is too big. It affects all of us, even those with no loans or mortgages. I believe if the house does not get this together in a true bepartisan fashion we all stand to lose value of our homes and other real estate, we risk seeing our 401(k)'s and other investments lose much value. Etc. Etc.
I think back to the Chrysler bailout. At the time I thought it was wrong. But within three years Chrysler paid it all back with interest.
I think I'd rather gamble and give the feds a few hundreds to a couple thousand than see my property values, etc. go way far south.
I have taken a little more casual attitude Don.
If property values do go down (and I think they will) It's fine with me. I'll never sell the burb house or the farm so I don't care what they're worth. I'll also buy more land. More is better.
If values stabilize or go up, I have all the land I need.
I do worry about the kids.....but we have and will help them whenever they need it.
Last...
My father is still living and still practicing law.I was talking to him last night. The last thing we agreed on was around 1950 and I don't remember what that was. However, last night we
BOTH AGREED THAT THERE WAS NOTHING WE COULD DO ABOUT THIS, SO WE HAD TO JUST RIDE IT OUT THE BEST WE CAN.
Mountain Don, I really respect your position. And a bailout such as is being discussed may be what ultimately keeps my retirement savings from vaporizing.
I just have to wonder if there are any alternatives. Maybe it is too late in the game. There is such a thing as debtor power, when the debtor owes so much, that to let them fall is to bring the creditors down as well. This country could easily be in that position. It just really makes me angry to see the total lack of noblesse oblige, for lack of a more "on point" term, that the top end has for the backs they stand on.
I definitely was getting my frustration off my chest. I just can't help but wonder what would happen if that $700 billion was divided up amongst the citizens....but maybe there is no time to consider that. There would be some idiots, but gee, if you had your wits about you and moved wisely, the loan sharks, the credit default swaps would be largely bypassed, and people could get into a house, pay for it, and the cheezy lenders would fade to insignificance.
Empty houses would fill up, increasing property tax revenues, and the money would start flowing again. People could afford to take the part time and low paying jobs that are left in this country, because they only would have to come up with property taxes, rather than stultifying mortgage payments, or the rent needed to cover the landlord's mortgage.
The credit companies that "chose poorly" would fail, as they should, but money would be flowing again.
That is probably very simplistic, but I don't see why it cannot be a starting point for strategic conversations.
Maybe there is just no time, or no incentive to actually think out of the box. >:(
They have already done more bailouts than they should have. There is a huge bubble in the stock market just like there is in housing. The bubble was caused by too much cash being pumped into the economy too fast. The same thing happened in the 1920's. Just like back then it was planned that way. Most of this so called bad debt the banks are holding is for money that never existed before the loans where made. They are air. The Fed owns that air and demands the banks repay it. So the reality is that the Fed caused the problems in the first place. Now they pretend to want to save us by buying back their own air for pennies on the dollar and in the process take the real money with it. Ours. By forcing the taxpayers to pay the loans the banks have out from the Fed. What a deal they loan us the money then we give it right back to them with nothing to show for it. Sounds like a scam to me.
Must be ground hogs day, Humm tomorrows not Friday , nor is it February, but it sure is a wierd time.
Let them eat cake! The bank / stock market that is.
"Let them eat cake!"
I think that's what they are saying about us. :(
We could all blame it on Marie, even though, they say , she never really said it. She got a bum deal, and so are we >:(
The Feds already printed up over $700 billion last week - $188 billion a day of fiat money - money not backed by anything... so with the newest plan that was just voted down, there still was no real oversight except for Paulson watching the hen house, there was a plan that if in 5 yrs the funds did well, they would make a proposal that the tax payer might get some money back d* d* d* So we leave Paulsen in place to decide where the money is going, we buy at above market prices & we also pay interest on the money - what a deal heh [slap]
So, like Don said - Chrysler was bailed out but it was a loan & they were expected to pay it back with interest. They also produce a product that we need. How is that like what is being proposed... we bail out the investment banks who have printed money out of thin air, considered that assets, leveraged it over & over - back in 2003 the regs were relaxed for Goldman Sachs, Lehman Bros, Merrill, JP Morgan & one other, so they could leverage up to 60x's; they also have the derivative market that isn't even regulated - we pay top dollar & we pay interest - I know I am repeating myself, but gee whiz, I don't see how that could be anything like Chrysler & the whole thing doesn't make any sense except that it is an outright slap in the face of the US tax payer - how is this going to stabilize the housing market or anything else? How is that going to cause trust when, as I stated earlier in a post, the US is bankrupt - people don't trust us anymore - so what is more printed money or electronic cash transfers going to provide? ??? ??? ??? Please explain because I'm not getting it...
In case someone thinks I pulled the $188 billion/day out of my head here's a link to the Financial Week article
http://www.financialweek.com/apps/pbcs.dll/article?AID=/20080926/REG/809259963
Barbara Bush said it about New Orleans ....and probably us.....
(http://www.endthiswar.org/barbaraantoinette.jpg)
Well, one thing I wonder about is what will happen to many businesses, if credit becomes tighter. Back when I was involved in the retail camera trade, 4 stores, there were times of the year that we relied on our bank to loan us money for paying bills or making payroll. Most of the time it was not necessary, but when it was if we could not have easily borrowed we would have been screwed.
Locally today I now someone with a small fledgling business who has just been told he has to pay certain suppliers every week rather than every 30 days.
On the other hand BofA just sent me notice that they've upped my credit card limit again. ???
we get offers in the mail of more credit on a daily basis. But to continue on the bailout
and BTW, this from Newt Gingrich "Having a former chairman of Goldman Sachs preside over disbursing hundreds of billions of dollars to Wall Street is a terrible concept and inevitably will lead to crony capitalism and the appearance of - if not the actual existence of - corruption," says Gingrich in his statement. "The Bush Administration has now provided three case studies in arrogance, isolation, and destructiveness: Michael Brown during Hurricane Katrina, Ambassador Jerry Bremer in Baghdad, and Secretary Paulson at Treasury."
"It is a tragic and very expensive legacy," he continued. "No conservative and no Republican should doubt how much it has hurt our cause and our party." although he has changed his stance & now to "reluctantly and sadly" support the $700 billion Wall Street bailout bill. But Paulsen has to be out of the picture... http://blogs.abcnews.com/politicalradar/2008/09/gingrich-now-ba.html
I agree it is a bad deal, Don, but these guys have already proved that they will walk off with the cash drawer. They cannot be given more no matter what .... not all can be winners. The Fed really is getting real money back with air and the Fed is not a US entity per US court. It is private --
http://www.globalresearch.ca/index.php?context=va&aid=8518
First ref I found for backing - no reason in particular. There are more if you don't like this one.