This is the worst country of all time.

This is the worst country of all time.

Are you talking eras here? In other words, US post-2000? If so, I agree whole-heartedly (with Germany 1937-1946 coming in a close second). And I love (and by love I mean hate) the headline I saw this morning: "McCain warns economy clean-up could be expensive." No fucking shit, you big douche! But what he means is that it's going to be expensive for everyone but his rich Republican buddies.

It's not a question of whether they should have been bailed out, of course they had to be. The ramifications of not bailing them out is too frightening to contemplate. The anger should be that we were in this situation in the first place.

Let them go under, I say, unless there are some very, very good reasons not to,

It's not a question of whether they should have been bailed out, of course they had to be. The ramifications of not bailing them out is too frightening to contemplate. The anger should be that we were in this situation in the first place.

Does The Great Depression ring a bell?

Yeah, it sucks, but I am pretty sure allowing the 18th largest corporation in the world and then allowing Lehman Bros. et al to follow suit would be a fairly bad idea. When all the banks start going under, the only principle that stands is ruthless pragmatism.

Congress needs to take a little time and pass reformative legislation. I am very angry that the brunt of the bill is flipped over to the working class and the people that set it in motion (and the rich top brass of the companies) are silent and lose little if at all of their income.

We are also losing jobs and houses out here

They (and us the taxpayers) are perpetuating the game.

Is the GREAT DEPRESSION a scare tactic? What proof is there that this is what would ensue? How can I trust anyone in this administration to know what would happen? It could be a load of horseshit, just like going into Iraq, eh? Are we going to look back and in retrospect, see what morons we were taken in for?

Don't think this all started last week, modern finance is a massive ponzi scheme and the schmoes at the bottom are the working class.

September 22, 2008
Cash for Trash
By PAUL KRUGMAN

Some skeptics are calling Henry Paulson’s $700 billion rescue plan for the U.S. financial system “cash for trash.” Others are calling the proposed legislation the Authorization for Use of Financial Force, after the Authorization for Use of Military Force, the infamous bill that gave the Bush administration the green light to invade Iraq.

There’s justice in the gibes. Everyone agrees that something major must be done. But Mr. Paulson is demanding extraordinary power for himself — and for his successor — to deploy taxpayers’ money on behalf of a plan that, as far as I can see, doesn’t make sense.

Some are saying that we should simply trust Mr. Paulson, because he’s a smart guy who knows what he’s doing. But that’s only half true: he is a smart guy, but what, exactly, in the experience of the past year and a half — a period during which Mr. Paulson repeatedly declared the financial crisis “contained,” and then offered a series of unsuccessful fixes — justifies the belief that he knows what he’s doing? He’s making it up as he goes along, just like the rest of us.

So let’s try to think this through for ourselves. I have a four-step view of the financial crisis:

1. The bursting of the housing bubble has led to a surge in defaults and foreclosures, which in turn has led to a plunge in the prices of mortgage-backed securities — assets whose value ultimately comes from mortgage payments.

2. These financial losses have left many financial institutions with too little capital — too few assets compared with their debt. This problem is especially severe because everyone took on so much debt during the bubble years.

3. Because financial institutions have too little capital relative to their debt, they haven’t been able or willing to provide the credit the economy needs.

4. Financial institutions have been trying to pay down their debt by selling assets, including those mortgage-backed securities, but this drives asset prices down and makes their financial position even worse. This vicious circle is what some call the “paradox of deleveraging.”

The Paulson plan calls for the federal government to buy up $700 billion worth of troubled assets, mainly mortgage-backed securities. How does this resolve the crisis?

Well, it might — might — break the vicious circle of deleveraging, step 4 in my capsule description. Even that isn’t clear: the prices of many assets, not just those the Treasury proposes to buy, are under pressure. And even if the vicious circle is limited, the financial system will still be crippled by inadequate capital.

Or rather, it will be crippled by inadequate capital unless the federal government hugely overpays for the assets it buys, giving financial firms — and their stockholders and executives — a giant windfall at taxpayer expense. Did I mention that I’m not happy with this plan?

The logic of the crisis seems to call for an intervention, not at step 4, but at step 2: the financial system needs more capital. And if the government is going to provide capital to financial firms, it should get what people who provide capital are entitled to — a share in ownership, so that all the gains if the rescue plan works don’t go to the people who made the mess in the first place.

That’s what happened in the savings and loan crisis: the feds took over ownership of the bad banks, not just their bad assets. It’s also what happened with Fannie and Freddie. (And by the way, that rescue has done what it was supposed to. Mortgage interest rates have come down sharply since the federal takeover.)

But Mr. Paulson insists that he wants a “clean” plan. “Clean,” in this context, means a taxpayer-financed bailout with no strings attached — no quid pro quo on the part of those being bailed out. Why is that a good thing? Add to this the fact that Mr. Paulson is also demanding dictatorial authority, plus immunity from review “by any court of law or any administrative agency,” and this adds up to an unacceptable proposal.

I’m aware that Congress is under enormous pressure to agree to the Paulson plan in the next few days, with at most a few modifications that make it slightly less bad. Basically, after having spent a year and a half telling everyone that things were under control, the Bush administration says that the sky is falling, and that to save the world we have to do exactly what it says now now now.

But I’d urge Congress to pause for a minute, take a deep breath, and try to seriously rework the structure of the plan, making it a plan that addresses the real problem. Don’t let yourself be railroaded — if this plan goes through in anything like its current form, we’ll all be very sorry in the not-too-distant future.

http://www.nytimes.com/2008/09/22/opinion/...amp;oref=slogin

Last Year's Big Five Wall Street Bonuses
September 22, 2008 7:12 AM

As the Bush Administration asks for close to a trillion dollars to prevent a worldwide financial cataclysm, here are some numbers you might find interesting -- courtesy of the ABC News Research Center and ABC News' Barbara Paulson.

In 2007, Wall Street's five biggest firms-- Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch, and Morgan Stanley - paid a record $39 billion in bonuses to themselves.

That's $10 billion more than the $29 billion loan taxpayers are making to J.P. Morgan to save Bear Stearns.

Those 2007 bonuses were paid even though the shareholders in those firms last year collectively lost about $74 billion in stock declines --their worst year since 2002.

If split equally among the approximately 186,000 workers at the former Big Five Houses, that bonus money means an average of $201,500 per person -- more than four times the $48,201 median household income in the U.S. last year.

http://blogs.abcnews.com/politicalpunch/20...-years-big.html

Well, maybe this is one house of cards that we should refuse to pay the bill for since we are already into hock up to our asses from Bush's other exploits. How about the Clinton days. What didn't you like? The prosperity or the peace?

I am against helping out these Republican schmucks and the old boys' club with taxpayer money.

we need agrimorfee's thoughts on this

The current goings on are the fruits of Reagan's deregulations and voodoo economics, trickle down theory and more and more Republican deregulation. My question is, where were the Dems during all this deregulation? Is the fox watching the chicken house and if so, what recourse do Americans really have?

Indeed, where is the outrage?

Your grasp of history is selective, at best. Yes, modern deregulation began with Reagan.

Where, you ask, was the DNC? Controlling Congress and giving Reagan everything he wanted.

The dereg trend continued with the first Bush and, once again, the Democratic controlled Congress went along for the ride.

It also continued during the Clinton years, as Bill Clinton became one of the first Democrats to openly embrace and endorse the the "Reagan Revolution" ideas about deregulation and privatizing government.

Many of us vote Democrat b/c it seems the only logical alternative, but that doesn't mean they're actually our allies.

or just fuck off.

So your response to inarguable truth is to change the subject and allign union-busting with dereg of major industries.

Brilliant.

You should run for office, or get your own radio show.

I do think that the bail out lets Wall Street off the hook and should include things like salary caps, tax increases, forced resignations, and the turning over of equity positions to the government.

But I don't believe the middle class is blameless in this debacle. The middle class (as well as the other classes) in the US have been ignoring savings and taking on huge amounts of debt for years. No one forced them to take on complex loans with no or small down payments and insufficient income to pay off the loans should the rates rise. No one forced them to expand their lifestyles by taking on huge amounts of credit card debt. The middle class benefited from the dot com bubble and housing bubble in their 401k plans, historically low unemployment, historically high house value appreciation.

The average US citizen has been over leveraging themselves for years. This despite numerous warnings that people were taking on too much debt, not saving enough, and using that leverage to chase a lifestyle that they had not sufficiently earned or saved for.

So I don't have huge amounts of sympathy for the middle class. I believe they are culpable in this debacle. I don't have a problem at all that they have to pay their share of the cleanup of this mess.

I don't remember signing up for any of this, I don't have a mortgage, I don't have a car on credit, When I use a credit card I pay it off in full at the end of the month. Like 50% of school leavers here I was encouraged to go to universoty , take out the student loan etc. It's a crock of shit holding up a house of cards.

What choice do you have when home ownership is pushed again and again as the American Dream and the average house-price to earnings ratio rockets past 3:1 up to 6:1.

My point is slightly muddled there, I was just suggesting that it's a little worrying that the British Government encouraging half of all UK school leavers to go to university and start racking up debt before they've even started earning is just a another piece in the puzzle.

LBO meltdown

Dodd Proposes Giving U.S. Equity Stake for Bad Debt (Update2)
By Dawn Kopecki and James Rowley

Sept. 22 (Bloomberg) -- Senate Banking Committee Chairman Chris Dodd offered an alternative today to the Bush administration's financial rescue plan aimed at giving the U.S. Treasury an equity stake when it helps companies burdened by debt.

Dodd, a Connecticut Democrat, is circulating a draft of his bill as Congress seeks to deal with a financial crisis that has been called the U.S.'s worst since the Great Depression.

The Bush administration is proposing a $700 billion plan to buy devalued assets from investment firms to keep the financial system from coming to a halt. Democrats have pledged to act quickly on the measure, even as they seek to create an oversight structure, limit the compensation of executives at the companies benefiting from the rescue and provide mortgage relief for struggling borrowers.

"We cannot just turn over $700 billion in taxpayer money and not insist that that taxpayer is going to be protected in this,'' Dodd told reporters yesterday.

Treasury Secretary Henry Paulson has urged Congress to pass legislation without delay and without linking it to new programs.

"We need this to be clean and quick, and we need to get it in place,'' Paulson said yesterday in an interview with ABC News.

Equity Stake

The legislation requires Treasury to take an equity stake equal to the purchase price of the assets being bought. If the company isn't publicly traded, the government would take senior debt instead, placing it in the front of the line of debt holders for repayment in the event of a bankruptcy.

Dodd's proposal also would create a five-member oversight board to supervise the Treasury secretary's purchase and sale of distressed mortgage debt.

It would consist of the chairmen of the Federal Reserve, Federal Deposit Insurance Corp. and the Securities and Exchange Commission as well as two members from the financial industry designated by congressional leaders.

The board would be authorized to set up a so-called credit review company consisting of Treasury employees to study the soundness of the purchases. Under the plan, the government would be required to obtain an equity stake equal to the value of the debt that is purchased from the companies, including those whose shares are not publicly traded. The Treasury secretary would also be required to issue weekly public reports on the amount of assets bought and sold by the U.S.

Penalize Executives

Dodd is proposing to penalize executives who take ``inappropriate or excessive'' risks. The executive compensation and severance packages could be reduced if that is ``in the public interest,'' the proposal says. It would also force executives to give back profits they earned that were based on company accounting measures that are later found to be inaccurate.

Republican presidential candidate John McCain, who has supported giving shareholders a bigger say in executive compensation in the past, said today that taxpayers shouldn't foot the bill for ``golden parachutes'' for officers of companies that have crumbled in upheaval on Wall Street.

``The senior executives of any firm that is bailed out by Treasury should not be making more than the highest paid government official,'' McCain said at a campaign event in Scranton, Pennsylvania.

The president is the highest paid federal official, with a salary of $400,000 a year.

U.S. Representative John Campbell, a California Republican and a member of the House Financial Services Committee, said that while he supports the Treasury proposal, he's willing to consider the creation of an oversight board and executive-pay limitations.

Committee Republicans plan to meet later today to discuss the issue, Campbell said.

"I don't think we have a lot of choice,'' Campbell said. ``And the consequences of doing nothing are unconscionable."

There is nothing wrong with going into debt to fund a college education. Although technically debt, it is really a leveraged investment in your own skills and abilities. And if you are not willing to take an educated risk on your own talents, you should probably just stick with lottery tickets.

The problem too many college students get into is going to colleges that are too expensive (in the US, going to fancy private schools rather than affordable state schools or community college stepping stones) to get a degree that does not lead directly to a job that allows them to pay of their loans in a reasonable amount of time.

When does the responsibility fall on the owners of these companies? The billionaire CEO's don't have any stake in reforming their companies mistakes?

Incredible how quick congress is to act and throw money at those that already have it. Passing this plan will go down as one of the most revelatory acts of American failure.