The stock market went down by like 777 points today. This was in reaction to Congress failing to pass the bailout bill. It's like they were punishing Congress. The problem here is that they're punishing Congress with fake money. It doesn't exist now and it never existed.
This money was created by one of the best self-perpetuating confidence schemes in history. People continued to buy houses that were clearly overpriced. They purchased these houses knowing they could not afford the payments. The banks continued to make loans to people that they knew would never pay them back. Now they want us to pay for their foolishness (all parties involved).
We keep hearing that if we don't do this, our economy will collapse, but hasn't it already collapsed? What good could come of this anyway? I don't understand. The selling point seems to be that people will continue to live in houses they can't afford and banks that make bad decisions will continue to exist. Would the ideal world be one wherein Enron still sells nothing and Eastern Airlines plies the skies with airplanes full of empty seats??
When their best argument for supporting this was/is 'Trust Us', i can't help but not trust them. From what it seemed, the purpose of this bill was less about the money (as it has been proven they can do this kind of thing without congressional approval (http://www.bloomberg.com/apps/news?pid=20601087&sid=ahwz_k5JvuB8&refer=home) by just printing whatever money they want, and more about giving Paulson the same powers over money supply as Bernake.
It will be nice if the banks have to start backing up their loans and deposits with real wealth, rather than the promise that if anything bad happens the gov't will take control and fix everything.
So we're just a self-indulgent brand of communism now? Does our system work or doesn't it? I say let the banks fail. Recessions happen.
So, it passed. It feels like Congress was forced to do something, but of course they couldn't be forced to do anything the least bit creative. The end result is that they did this...
Now the American taxpayer is burdened by $700B in debt (to start) to back up bad loans that will pay absolutely nothing back.
Am I right about this or aren't I? It seems like what we should be doing is pouring investment into the few banks left that made good decisions to finance their buyouts of banks that made bad decisions... Why let the worst banks continue to exist??
All our economic depressions come from stupid wealthy white people not understanding how the economy works.
Oh well, another example of Keynesian economics gone haywire. Time to dust off F.A. Hayek, gentlemen.
>>6 Actually all that money is just going to be printed out taxes won't be increased at all which is just as terrible but whatever. Also it is a lot more than $700B now.
you're a little off on what you're saying. first thing it's easy to say that something like the housing bubble was caused by a lack of observation on the buyers part. they were buying cause the prices were going up. it's just a bubble no different from tech in early 2000s except this time it had a greater effect.
and as for the bailout i seriously doubt that all 700$ billion is going to come from tax payers. and you're misjudging the fact that the tax payer is going to pay for that right up front. it's going to take at least 3 years before that 700 billion + is gonna show up our tax reports. not to mention the fdic is (supposedly) trying to make a statement by just using banking premiums to fund this whole bailout, which i doubt will happen but they will probably keep it up for atleast a few months.
and you're stupid if you think this pseudo recession is any bad news for the "stupid wealthy white people" they understand it better than you do.
"Am I right about this or aren't I? It seems like what we should be doing is pouring investment into the few banks left that made good decisions to finance their buyouts of banks that made bad decisions... Why let the worst banks continue to exist??"
it's not that simple to just side with the banks that are better off. first thing you're forgetting is that this bailout isn't just aimed at banks but "institutions" and if you've looked at the statements and heard a watched a little of the talks you'll realize that when they say 'assets', ONLY in congress will they conclude that the definition of 'assets' includes liabilities.
anyway it's not just about making sure the financial plumbing works at this point. imagine a stack of dominoes arranged in way that it has the characteristics of a mobius strip and you'll understand what i'm getting at here.
the bailout is interesting and all, but you have to realize how much foreign money has been poured into the us since the USD started to get weak a year + ago. the investors that have been involved in yen carry trade is just enormous in terms of sheer volume and once this carry trading starts to clear up (i think it's still .5%~.0% in japan right now) those investors are going to start to pull ALL of their money out of the US secondary markets at once, AKA flooding the secondary bond markets and basically wrecking the real asset market.
prolly going to happen in a few weeks, maybe sooner, idk. just look at how the USD has been gaining vs EURO and GBP the last month or so and you'll see waht i mean
after that happens you'll see benjamin graham's ghost buying securities till he drops.
any way, imagine how much the US govt would make, and the secretary's position after all of this shit is over. lol you heard about how that guy started groveling on his knees during the first talks.