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  #1  
Old 09-23-2008, 05:58 AM
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sojustask sojustask is offline
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Experts See a Need for Punitive Action in Bailout

This whole bailout is just bullshit. Corps get rescued and people get punished. Either rescue both or don't rescue either. Preferably the latter.


Experts See a Need for Punitive Action in Bailout

By PETER S. GOODMAN
Published: September 22, 2008

As economists puzzle over the proposed details of what may be the biggest financial bailout in American history, the initial skepticism that greeted its unveiling has only deepened.

Some are horrified at the prospect of putting $700 billion in public money on the line. Others are outraged that Wall Street, home of the eight-figure salary, may get rescued from the consequences of its real estate bender, even as working families give up their houses to foreclosure.

Most economists accept that the nation’s financial crisis — the worst since the Great Depression — has reached such perilous proportions that an expensive intervention is required. But considerable disagreement centers on how to go about it. The Treasury’s proposal for a bailout, now being negotiated with Congress, is being challenged as fundamentally deficient.
“At first it was, ‘thank goodness the cavalry is coming,’ but what exactly is the cavalry going to do?” asked Douglas W. Elmendorf, a former Treasury and Federal Reserve Board economist, and now a fellow at the Brookings Institution in Washington. “What I worry about is that the Treasury has acted very quickly, without having the time to solicit enough opinions.”

The common denominator to many reactions is a visceral discomfort with giving Treasury Secretary Henry Paulson Jr. — himself a product of Wall Street — carte blanche to relieve major financial institutions of bad loans choking their balance sheets, all on the taxpayer’s bill.

There are substantive reasons for this discomfort, not least concerns that Mr. Paulson will pay too much, thus subsidizing giant financial institutions.

Many economists argue that taxpayers ought to get more than avoidance of the apocalypse for their dollars: they ought to get an ownership stake in the companies on the receiving end.

But an underlying source of doubt about the bailout stems from who is asking for it. The rescue is being sold as a must-have emergency measure by an administration with a controversial record when it comes to asking Congress for special authority in time of duress.

“This administration is asking for a $700 billion blank check to be put in the hands of Henry Paulson, a guy who totally missed this, and has been wrong about almost everything,” said Dean Baker, co-director of the liberal Center for Economic and Policy Research in Washington. “It’s almost amazing they can do this with a straight face. There is clearly skepticism and anger at the idea that we’d give this money to these guys, no questions asked.”

Mr. Paulson has argued that the powers he seeks are necessary to chase away the wolf howling at the door: a potentially swift shredding of the American financial system. That would be catastrophic for everyone, he argues, not only banks, but also ordinary Americans who depend on their finances to buy homes and cars, and to pay for college.

Some are suspicious of Mr. Paulson’s characterizations, finding in his warnings and demands for extraordinary powers a parallel with the way the Bush administration gained authority for the war in Iraq.
Then, the White House suggested that mushroom clouds could accompany Congress’s failure to act. This time, it is financial Armageddon supposedly on the doorstep.

“This is scare tactics to try to do something that’s in the private but not the public interest,” said Allan Meltzer, a former economic adviser to President Reagan, and an expert on monetary policy at the Carnegie Mellon Tepper School of Business. “It’s terrible.”

In part, Mr. Paulson’s credibility has been dented by his pronouncements in previous weeks that the crisis was already contained. Some suggest this was a well-intentioned effort to stem panic. But the aftermath complicates his quest for the bailout.

“If you view your public statements as an instrument of policy, people don’t believe you anymore,” said Vincent R. Reinhart, a former Federal Reserve economist and now a scholar at the conservative American Enterprise Institute.

The biggest point of contention is over whether and how taxpayers would benefit if the bailout succeeded in righting the financial system, sending banking stocks upward.

In Mr. Paulson’s plan, the Treasury would have the right to buy as much as $700 billion worth of troubled investments, with the taxpayer recouping the proceeds when those investments were sold over coming years. But many economists — Mr. Elmendorf among them — argue that taxpayers should get more out of the deal, securing stock in the banks that make use of the bailout. The government could then sell off that stock at a profit when conditions improve. A similar approach was used successfully in Sweden in the early 1990s when its financial system melted down.

Others argue that any bailout must pinch the people who have run the companies now needing rescue, along with their shareholders, addressing the unseemly reality that executives have amassed beach houses and fat bank accounts while taxpayers are now stuck with the bill for their reckless ways.

“It absolutely has to be punitive,” Mr. Baker said. “If they sell us the junk, then we own the company. This isn’t a way to make these companies and their executives rich. This should be about keeping them in business so the financial system doesn’t collapse.”

Other questions center on how to value what the Treasury aims to purchase — an issue that goes to the heart of the crisis itself.

The financial system got to its dangerous perch by betting extravagantly on real estate. When housing prices began plummeting and borrowers stopped making payments, financial institutions found themselves with huge inventories of bad loans.

Not simple loans, but complex investments created by pooling millions of mortgages together and then slicing them into pieces. These were the investments that Wall Street bought, sold and borrowed against in cooking up the money it poured into housing.

The trouble is that these investments are so intertwined and complex that no one seems able to figure out what they are worth. So no one has been willing to buy them. This is why banks have been in lockdown mode: with mystery enshrouding both the value of their assets and their future losses, banks have held tight to their remaining dollars, depriving the economy of capital.

Now, the Treasury aims to clear the fog by buying up these investments. But their value is as mysterious as ever.

“There’s a tendency for people to think these are stocks and bonds and you know what the price is,” said Bruce Bartlett, a former White House economist under President Reagan. “The problem is people are operating in a world in which nobody knows what the hell is going on. There’s some naïve assumptions about how this would function.”

If Mr. Paulson pays the market rate — whatever that is — that presumably would not be enough to persuade banks to sell. Otherwise, they would have sold already. For the plan to work, Treasury has to pay a premium.

“It’s a straight subsidy to financial institutions,” said Martin Baily, a former chairman of the Council of Economic Advisers in the Clinton administration, and now a senior fellow at the Brookings Institution. “You’re essentially giving them money.”

Mr. Baily favors the basics of the Paulson plan, albeit with some mechanism that would give the government a slice of any resulting profits. And yet he remains troubled by the dearth of information combined with the abundance of zeroes in the bailout request.

“I’d like a clearer statement of what we were afraid was going to happen that requires $700 billion,” Mr. Baily said. “Maybe they don’t want to talk about it because it would scare everybody, but it’s a bit much to ask.”


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  #2  
Old 09-23-2008, 06:43 AM
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mumbles mumbles is offline
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Re: Experts See a Need for Punitive Action in Bail

yes. i was hoping they would throw the billions out so fast they might accidently send me one or two. i could live for weeks on a billion dollars.

how about they cut the government payroll by 700 billion to balance ? ya know, balanced budget ? congressmen could lay off their staffs and answer the phone themselves and when they want to know something, use google.




Last edited by mumbles : 09-23-2008 at 06:46 AM.
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  #3  
Old 09-23-2008, 06:54 AM
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Re: Experts See a Need for Punitive Action in Bail

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Originally Posted by mumbles View Post
yes. i was hoping they would throw the billions out so fast they might accidently send me one or two. i could live for weeks on a billion dollars.

how about they cut the government payroll by 700 billion to balance ? ya know, balanced budget ? congressmen could lay off their staffs and answer the phone themselves and when they want to know something, use google.
That plan wouldn't save enough to get us through the next 5 minutes, genius. Better yet, tell Bush, Cheney and all the War Mongering Monkeys For McCain we don't need a 51st State in the Middle East.


Last edited by dchristie : 09-23-2008 at 06:59 AM.
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  #4  
Old 09-23-2008, 08:51 AM
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Jax74 Jax74 is offline
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Re: Experts See a Need for Punitive Action in Bail

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Originally Posted by dchristie View Post
That plan wouldn't save enough to get us through the next 5 minutes, genius. Better yet, tell Bush, Cheney and all the War Mongering Monkeys For McCain we don't need a 51st State in the Middle East.

Wow, am I wrong or is Mrs. Chrissie having a total SE moment here?

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  #5  
Old 09-23-2008, 09:08 AM
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Connecticut Victim Connecticut Victim is offline
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Re: Experts See a Need for Punitive Action in Bail

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Originally Posted by sojustask View Post
This whole bailout is just bullshit. Corps get rescued and people get punished. Either rescue both or don't rescue either. Preferably the latter.
Hi Lady Mod,

You know a lot about Ron Paul. How would he handle this bailout?

Wouldn't it be a good idea for the government to consult people outside the political arena.. like the Donald Trumps and Bill Gates' of this world? You know - the ones who actually run successful businesses? I would think guys like this would have some pretty good suggestions... "been there - done that"??

What a mess....

CV

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  #6  
Old 09-23-2008, 09:18 AM
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dchristie dchristie is offline
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Re: Experts See a Need for Punitive Action in Bail

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Originally Posted by Jax74 View Post
Wow, am I wrong or is Mrs. Chrissie having a total SE moment here?
LOL..And Fuck you too, you useless ignorant gurgling pile of toxic waste.

Yet another of your valuable and insightful contributions to the general discourse of the forum. Great.

I hope you don't get banned for being the constipated and irrelevant little spamming gas-bag you are.

I enjoy, at least, rhetorically stepping on your stupid face if I can't do it in person.

Why not do something that you have some talent for?

Like blowing the exhaust pipe on your delivery truck.


Last edited by dchristie : 09-23-2008 at 09:27 AM.
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  #7  
Old 09-23-2008, 09:20 AM
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Jreed Jreed is offline
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Re: Experts See a Need for Punitive Action in Bail

Quote:
Originally Posted by Connecticut Victim View Post
Hi Lady Mod,

You know a lot about Ron Paul. How would he handle this bailout?

Wouldn't it be a good idea for the government to consult people outside the political arena.. like the Donald Trumps and Bill Gates' of this world? You know - the ones who actually run successful businesses? I would think guys like this would have some pretty good suggestions... "been there - done that"??

What a mess....

CV

.

One of the main problems with our system today is that we're stuck with lifelong politicians that have very little real world experience.

They are all money grabbing power hungry ego maniacs. Very few, if any, run for office because they care about the country.

Maybe I'm too jaded. But if a meteor hit DC and killed every politician...I think this country would be just fine.
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  #8  
Old 09-23-2008, 09:20 AM
Devilsown Devilsown is offline
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What Ron Paul says

Here's his take on the whole shooting match. I say we all push for him as write in. The 2 party system is a failure.....

http://www.cnn.com/2008/POLITICS/09/...out/index.html

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  #9  
Old 09-23-2008, 09:55 AM
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Jax74 Jax74 is offline
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Re: Experts See a Need for Punitive Action in Bail

Quote:
Originally Posted by dchristie View Post
LOL..And Fuck you too, you useless ignorant gurgling pile of toxic waste.

Yet another of your valuable and insightful contributions to the general discourse of the forum. Great.

I hope you don't get banned for being the constipated and irrelevant little spamming gas-bag you are.

I enjoy, at least, rhetorically stepping on your stupid face if I can't do it in person.

Why not do something that you have some talent for?

Like blowing the exhaust pipe on your delivery truck.

LOL Wow, you really are one sad, sorry, angry little man aren't you. Such a rage filled reply to a fairly mild comment on my part. We know you hate everything but geez try not to make it so obvious.

You must be a very lonely person. But at least you are classy.......Bwah ha ha ha ha ha ha ha ha .....sorry, could not keep a strait face there.


And thanx for hoping I dont get banned. I hope you dont get banned for being a total rage filled, diarrheah spewing lunatic.

With a temper like that I bet you are quite familiar with your local law enforcement officers. They probably know you by name.

And suggesting that there is any remote chance of you stepping on my face in person? As stupid as that sounds you could try if you like but you would only end up picking up your teeth with broken fingers, old man.

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  #10  
Old 09-23-2008, 10:01 AM
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Jax74 Jax74 is offline
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Re: Experts See a Need for Punitive Action in Bail

I have to say I agree with lady mod on this one. The gov shouldn't just be bailing out every big company that is on the rocks. It is a very large step in the wrong direction. It is a republican administration that is doing it and conservatives are suppose to be against big gov and massive spending.

These companies enjoy the fruits of their labor when things are great. They also need to feel the sting of their failures when they don't do a good job. And bad CEO's golden parachutes should go towards paying off their companies debts.

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  #11  
Old 09-23-2008, 10:17 AM
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Jreed Jreed is offline
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Re: Experts See a Need for Punitive Action in Bail

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Originally Posted by dchristie View Post
LOL..And Fuck you too, you useless ignorant gurgling pile of toxic waste.
Yet another of your valuable and insightful contributions to the general discourse of the forum. Great.
I hope you don't get banned for being the constipated and irrelevant little spamming gas-bag you are.
I enjoy, at least, rhetorically stepping on your stupid face if I can't do it in person.
Why not do something that you have some talent for?
Like blowing the exhaust pipe on your delivery truck.

No Jax...this is the true SE moment.

It's a little long...yet all of it is totally worthless.
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  #12  
Old 09-23-2008, 10:25 AM
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dchristie dchristie is offline
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Re: Experts See a Need for Punitive Action in Bail

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Originally Posted by Jax74 View Post
LOL Wow, you really are one sad, sorry, angry little man aren't you. Such a rage filled reply to a fairly mild comment on my part. We know you hate everything but geez try not to make it so obvious.

You must be a very lonely person. But at least you are classy.......Bwah ha ha ha ha ha ha ha ha .....sorry, could not keep a strait face there.
LOL.. I'm neither sad, sorry, angry or little, you piss-ant twerp.

Sure, you can't keep a straight face. In fact, you can't even spell it, retard. Bwa ..ha.ha.ha

What makes you think you merit my hate? That's funny. Keep dreaming, buttwipe. You don't even merit my contempt. To me, you're a joke.

Quote:
And thanx for hoping I dont get banned. I hope you dont get banned for being a total rage filled, diarrheah spewing lunatic.

With a temper like that I bet you are quite familiar with your local law enforcement officers. They probably know you by name.

And suggesting that there is any remote chance of you stepping on my face in person? As stupid as that sounds you could try if you like but you would only end up picking up your teeth with broken fingers, old man.
LOL...I wouldn't even have to try, fucknuts. I'd be scraping you off the bottom of my boots faster than you could scream for your mommy.

And, when it comes to you, the only thing that would make me really angry behind it all would be the blood splatter stains on the Italian leather. They probably cost quite a bit more than your fucking car.


Last edited by dchristie : 09-23-2008 at 10:34 AM.
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  #13  
Old 09-23-2008, 10:31 AM
Devilsown Devilsown is offline
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Re: Experts See a Need for Punitive Action in Bail

Geez you all need to take a chill pill.

No wonder this country is screwed, such polarized opinions are good for nothing.

Dave

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  #14  
Old 09-23-2008, 12:27 PM
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Jax74 Jax74 is offline
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Re: Experts See a Need for Punitive Action in Bail

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Originally Posted by dchristie View Post
LOL.. I'm neither sad, sorry, angry or little, you piss-ant twerp.

Sure, you can't keep a straight face. In fact, you can't even spell it, retard. Bwa ..ha.ha.ha

What makes you think you merit my hate? That's funny. Keep dreaming, buttwipe. You don't even merit my contempt. To me, you're a joke.



LOL...I wouldn't even have to try, fucknuts. I'd be scraping you off the bottom of my boots faster than you could scream for your mommy.

And, when it comes to you, the only thing that would make me really angry behind it all would be the blood splatter stains on the Italian leather. They probably cost quite a bit more than your fucking car.

LOL you are a funny little person.


And no, you dont sound sad, sorry or angry. Pfffft....not at all. LMAO


Last edited by Jax74 : 09-23-2008 at 12:30 PM.
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  #15  
Old 09-23-2008, 06:18 PM
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sojustask sojustask is offline
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Re: Experts See a Need for Punitive Action in Bail

Whoa, testerone overload. Is it a full moon or something?

Geez guys! Chill out.


Lady Mod

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When an honest man/woman who is mistaken learns the truth, at that exact moment, he/she ceases to be mistaken or he/she ceases to be honest.

When we are unable to find tranquility within ourselves, it is useless to
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  #16  
Old 09-23-2008, 06:19 PM
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sojustask sojustask is offline
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Re: Experts See a Need for Punitive Action in Bail

Quote:
Originally Posted by Jax74 View Post
I have to say I agree with lady mod on this one. The gov shouldn't just be bailing out every big company that is on the rocks. It is a very large step in the wrong direction. It is a republican administration that is doing it and conservatives are suppose to be against big gov and massive spending.

These companies enjoy the fruits of their labor when things are great. They also need to feel the sting of their failures when they don't do a good job. And bad CEO's golden parachutes should go towards paying off their companies debts.
The whole banking industry is not only UnConstitutional but runs the biggest illegal profit ring on the planet.

Let these damn banks fail. We'll all be better off for it.


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When an honest man/woman who is mistaken learns the truth, at that exact moment, he/she ceases to be mistaken or he/she ceases to be honest.

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