$700 billion bailout bill fails in Congress
#61
One thing you forgot to mention about the drepression fo the 30's is unemployement was at 25%. Today we are at 6%. That is a huge factor. At least people are still working and still can buy things. Lets also not fopget about the people who just walked away from their house because they were upside down on the what the home is worth. These people still have money and will keep on spending. I doubt we are heading for a depression, we have a lot of people panicing, just like when oil went through the roof.
#62
Keep in mind that much of this big effin mess lies at the feet of certain people in Congress, who for years, directed Fannie and Freddie to influence, pressure, even threaten banks to make hundreds of thousands of loans to unqualified people. Corruption, plain and simple.
There is PLENTY of blame to go around here, including government meddling - or at least meddling from government individuals with their own agendas.
With that said, some government intervention is now needed. But it needs to be the right solution, the smart solution. This is too important and too big to simply create a quick, kneejerk plan with everyone's BS pork attached to it. Let's hope that the politicians can put their own self-serving interests momentarily aside, and work together to effectively do the 'people's business'. Everyone should take a deep breathe and relax for a moment. I'd rather wait afew more days for the right plan - or at least a better plan - than rushing an inadequate one through.
The stakes are huge here, let's not blow it.
There is PLENTY of blame to go around here, including government meddling - or at least meddling from government individuals with their own agendas.
With that said, some government intervention is now needed. But it needs to be the right solution, the smart solution. This is too important and too big to simply create a quick, kneejerk plan with everyone's BS pork attached to it. Let's hope that the politicians can put their own self-serving interests momentarily aside, and work together to effectively do the 'people's business'. Everyone should take a deep breathe and relax for a moment. I'd rather wait afew more days for the right plan - or at least a better plan - than rushing an inadequate one through.
The stakes are huge here, let's not blow it.
It's also chillingly similar to what conditions caused the depression.
In the 1920s we had Coolidge's hands off government which took government involvement out of just about everything that wasn't nailed down. Much like Bush, Coolidge left everything alone. Fortunately for him, and unlike Bush, he only served 1 term. Poor Hoover was sworn in to office in March, and in September the economy started flying apart.
The other thing you mentioned is also creppily similar. The stock market was overvalued much like today's housing market. Banks back then gave freely on loans wjhich people then used to buy stocks which in turn drove up stock prices. When the bubble burst, just like today with our lending institutions, they found massive default, and were left holding alot of terriffic debts that wouldn't be repayed. In turn, to compensate they all but eliminated credit and that created the cycle of less money for less purchases resulting in less employment that snowballed over the next few years.
Like then, today banks and lending institutions are failing and the lack of credit is having an affect on business and the general public as an anvil would have to a swimmer.
There is no doubt if we didn't have the mechinisms in the stock market that we have today, and we didn't have the government programs and regulation (that's left after the past 7 years of deregulation), we'd no doubt be knee deep in 1930s style trouble right now.
Instead, things are happening in slow motion.
#63
One thing you forgot to mention about the drepression fo the 30's is unemployement was at 25%. Today we are at 6%. That is a huge factor. At least people are still working and still can buy things. Lets also not fopget about the people who just walked away from their house because they were upside down on the what the home is worth. These people still have money and will keep on spending. I doubt we are heading for a depression, we have a lot of people panicing, just like when oil went through the roof.
If we are to use the depression analogy, we are not in the 1930s.... we are roughly in January-February 1930. Employment was still on par with what it was before the October crash, and the market was steadily improving!
There were people who just walked away from their loans back then as well. Unlike today, there was no social security number that people could track you down on, or call up a computer database and find out certain parts of your history (I've done it myself as part of my former job, so trust me on that).
You say people with money will still spend. Today when you look at the auto sales reports (and retail sales reports for the last week), I want you to keep that idea in mind. Perhaps you will see how nieve that viewpoint is.
Let me explain this again:
The depression was created when a cycle of layoffs and drop in purchases spiraled out of control till it hit bottom (and stayed there).
75% of the public was still actually employed during the worse part of the depression years. People still had money. But they redirected spending towards things they needed, like food and replacing broken items. They did not spend on major purchases or upgraded items or services they could do themselves. That was bad enough to wipe out a large amount of US jobs.
Things different today?
1. Today a normal unemployment rate is 4-5%. Before the stock market crash it was around 8-10%. The rules changed since then to take into account seasonal employment and excluding people who are unemployed too long... those that supposedly "gave up looking for work". Using the same standrd of measurement, employment today and in October 1929 are probably close to the same.
Pay attention to this part:
All it took was a roughly 5-10% increase in the unemployment rate to get things to start to spiral out of control. That 25% unemployemt you mention (discounting the 8-10% that was the norm) was conservatively a 17% increase in unemployment. You pointed to 6% today. If all other US industries faced the same sales drops as the US car industry, that's going to be way more than enough to not just send us into a depression, but is enough to match the severity of the middle of the Great depression of the 30s.
2. We have become far more used to luxury goods and services than back in 1929.
Bonus point: Current auto sales declines today of 20-35% just about matches the drop in car sales during the early depression years.
3. The US was a serious mega-exporter back then. We were even a leading exporter of oil (cutting off oil exports to Japan prompted them to attach Pearl Harbor to cripple our fleet so they could take over oil rich countries in the Pacific unchallenged). Today, we have a massive trade deficit so there isn't exports to cushion us as there was during the depression... yes, I said cushion us as in the depression.
4. We now import 75% of our oil. An depression-style economic crash will send our fuel prices into the stratosphere because the dollar will become almost worthless on the world market which means we'll need way more dollars to buy oil. That's going to be exaggerated by people pulling their money out of US securities & stocks, and placing it in oil, sending prices even higher.
This is the type of stuff that the Feds see and why they're in a sudden state of panic. I'd venture that they even knew we were headed in this direction for months if not years.
As I said before, don't think for a minute that we aren't in serious s*it (no other word can describe it). We are.
To think otherwise is foolish.
Last edited by guionM; 10-01-2008 at 02:16 PM.
#64
All I know is that what we did, and what we are doing, is not working.
We need a new direction.
#66
#67
With response to the posts by Z284ever and Doug on the CRA, keep in mind that these bad loans only represent perhaps a couple hundred billion dollars (the number I've heard was $150B). So where'd the rest of this trillion-dollar mess come from? That was the bank's packaging of these and a whole lotta other mortgages into securities, and the creation of the opaque derivatives markets, and the highly-leveraged financing that went into trading all of this false wealth.
Extremely bad business practices by the banks created a powder keg. The foreclosures of mortgages that were made possible by the CRA (a terrible law, BTW) simply acted as a spark to light off the whole mess.
If you compete unemployment using older formulas, it's probably in the 12-13% range - not as bad as the depression, but certainly not great!
I also fail to share your faith in the ability of consumers to keep spending.
Extremely bad business practices by the banks created a powder keg. The foreclosures of mortgages that were made possible by the CRA (a terrible law, BTW) simply acted as a spark to light off the whole mess.
I also fail to share your faith in the ability of consumers to keep spending.
#68
I wonder how much extra BS is being packed into this bill? Sounds like we as taxpayers will get screwed again.
#69
With response to the posts by Z284ever and Doug on the CRA, keep in mind that these bad loans only represent perhaps a couple hundred billion dollars (the number I've heard was $150B). So where'd the rest of this trillion-dollar mess come from? That was the bank's packaging of these and a whole lotta other mortgages into securities, and the creation of the opaque derivatives markets, and the highly-leveraged financing that went into trading all of this false wealth.
Extremely bad business practices by the banks created a powder keg. The foreclosures of mortgages that were made possible by the CRA (a terrible law, BTW) simply acted as a spark to light off the whole mess.
Extremely bad business practices by the banks created a powder keg. The foreclosures of mortgages that were made possible by the CRA (a terrible law, BTW) simply acted as a spark to light off the whole mess.
"When Paulson came to congress sat, he had 3 pages of what needed to be done. On monday, the house had 110 pages including a mental health plan and tax breaks for teacher try to buy a home and on and on. Today, two days later, it's now up to 453 at noon time."
I wonder how much extra BS is being packed into this bill? Sounds like we as taxpayers will get screwed again.
I wonder how much extra BS is being packed into this bill? Sounds like we as taxpayers will get screwed again.
Last edited by Z284ever; 10-01-2008 at 05:04 PM.
#70
"When Paulson came to congress sat, he had 3 pages of what needed to be done. On monday, the house had 110 pages including a mental health plan and tax breaks for teacher try to buy a home and on and on. Today, two days later, it's now up to 453 at noon time."
I wonder how much extra BS is being packed into this bill? Sounds like we as taxpayers will get screwed again.
I wonder how much extra BS is being packed into this bill? Sounds like we as taxpayers will get screwed again.
#71
I think raising the limits was a smart move, and should have been fast tracked through on its own.
#72
What should be a narrowly focused package is spiraling out of control as these knuckl.... worthless bastards weasel in every little pet project on thier agenda.
#73
$700 billion is just a line of credit. It means nothing. They will buy and then sell, buy and sell - it is not a loan. It's a line of credit. As long as you pay it off, you can use this line of credit infinitely for your purposes.
The question is, why is this necessary? Isn't this a path to eliminate small players, and consolidate into a limited number of really big corporations with unprecedented control?
That should be red flag number one.
Red flag number two is how quickly they want to ram this through. At some point they should "freeze" the bill, meaning no additions, subtractions, or changes. Each member of senate/congress MUST read it and understand it in its entirety. Only then can it be voted on.
Red flag number three is the kind of power Paulson was asking when intially the bill provided no oversight of any kind over his dictatorial power. It could be debated it was done so on purpose, and the bill they have now is what they really wanted - a bloated obfuscated document.
Some other red flags... According to Bush, ir@q definitely had wmd. According to Bush, the economy was in stable state all the time. At least those two items proved completely false. Now, he is saying this bill is the only way to save the economy. Just how can he claim we are in such dire straits when about 2 months ago, things were going well? Moreover, his track record proves that what is true is the opposite to what he says.
Figure that out...
Moreover, those guaranteed savings of $250,000 will not mean a thing when hyperinflation ensues. It's just a pacifier to convince the masses that their money is good. It does not encourage long-term solutions, it encourages people in the present in the now.
The question is, why is this necessary? Isn't this a path to eliminate small players, and consolidate into a limited number of really big corporations with unprecedented control?
That should be red flag number one.
Red flag number two is how quickly they want to ram this through. At some point they should "freeze" the bill, meaning no additions, subtractions, or changes. Each member of senate/congress MUST read it and understand it in its entirety. Only then can it be voted on.
Red flag number three is the kind of power Paulson was asking when intially the bill provided no oversight of any kind over his dictatorial power. It could be debated it was done so on purpose, and the bill they have now is what they really wanted - a bloated obfuscated document.
Some other red flags... According to Bush, ir@q definitely had wmd. According to Bush, the economy was in stable state all the time. At least those two items proved completely false. Now, he is saying this bill is the only way to save the economy. Just how can he claim we are in such dire straits when about 2 months ago, things were going well? Moreover, his track record proves that what is true is the opposite to what he says.
Figure that out...
Moreover, those guaranteed savings of $250,000 will not mean a thing when hyperinflation ensues. It's just a pacifier to convince the masses that their money is good. It does not encourage long-term solutions, it encourages people in the present in the now.
#74
muckz,
Brian Williams talked about your exact points last week. I was surprised that no one else picked up on those points.
Those red flags are the exact reasons that this bill scares me.
I really don't know how to feel about this bill. I'm pretty torn.
Brian Williams talked about your exact points last week. I was surprised that no one else picked up on those points.
Those red flags are the exact reasons that this bill scares me.
I really don't know how to feel about this bill. I'm pretty torn.
#75
Do you want to know what kind of pressure is being put on congress to pass this through? Here is a link to Youtube video of Rep. Brad Sherman's speech. Judge for yoruselves just who wants this bill to pass and why so badly.
http://www.youtube.com/watch?v=HaG9d_4zij8
http://www.youtube.com/watch?v=HaG9d_4zij8