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That is true.

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Partially True. It isn't just banks, it's all financial institutions who purchased any non-agency (non-GSE insured) mortgage-backed debt. But increasingly the contagion is spreading to other sectors such as preferred stock, corporate bonds, and even short-term debt markets. No one wants to buy any of the stuff and everyone wants to sell it, thus devaluing it further. This is further compounded by people pulling money out of money market funds (as well as hedge funds & mutual funds) forcing these funds to sell assets (further driving down prices).

But the point is, that yes, banks and others have these on their balance sheets and if you're familiar with a typical balance sheet you have assets vs. Liabilities & equity. These two sides are supposed to be equal, in other words: A=L+E. If Asset values drops dramatically, that erases your E (since the equation has to balance). Once your E goes to zero, you are insolvent and have more liabilities than you have assets to cover them and that is decidedly NOT GOOD. I've oversimplified things here a little bit, but you get the point...

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The plan is to BUY the assets (not take/seize them). This is to stop the bleeding, I.e. to stop the forced selling of assets that depresses pricing. Housing market stability is not really the point of the plan although reworking many of these loans has to be part of the plan (Roubini had a good article about the HOLC).

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So this brings us to your last point and if you've been reading this far you should be able to see why you can't just destroy the securities. Aside from the obvious reason that these are people's home mortgages you're talking about, you would be blowing a hole in the bank's balance sheet (destroying an asset also leads to a destruction of the right hand side of your balance sheet).

There's an old saying in the stock market (which is probably true of the bond market as well) "The market can stay irrational for a lot longer than you can stay solvent". This phrase was usually used in the context of people buying cheap assets or selling expensive assets losing their shirts because they were too early. George Soros got his ass handed to him in 1999 & 2000 by shorting internet stocks - he was right in the end that they were very overvalued, but lost alot of money because he was way too early in his call and they kept going up for a while.

Anyway, my point is (yes, i am finally getting to my point) many of these securities can and will be "money good" and pay back all or most of par value, however none of these institutions has the ability to hold them long enough to get their recovery value because the securities are blowing a hole in their balance sheets and if you don't have a balance sheet you can't lend. And if you can't lend, well, you get the idea... The US Government DOES have that ability and by clearing some of these assets off the balance sheets of banks, so they can re-start the lending process.

Hope that helps answer your question.

If I understand this correctly: the burst of the housing bubble devalued a whole class of securities which no one can/wants to value, therefore banks balance sheets are so impaired that they won't lend to each other, or to anyone for fear it may not be repaid.

The Plan is to take over those securities in the hopes of the housing market stabilizing and appreciating and at some point, order is restored.

One thing I don't understand is why can't these instruments be destroyed so we can start fresh? I think it's a choice between a car crash or a cancer, that it will ultimately lead to the same conclusion - bailout or otherwise.

In my uninformed view, I think the markets should correct themselves.

Instead of saddling taxpayers with $700B in bad debt, the federal government should just run a lottery, giving $1M to 700,000 people. Anyone who filed a tax return would have an automatic entry.

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No, that is just false.

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From what I'm hearing GE (yes, that GE, builder of Aircraft Engines, Lightbulbs, owner of NBC, Medical device, etc, etc) is having "CP Issues" If you can't fund yourself, you can't run your business. The fact that their CFO had to come out this morning and make a statement saying their program is "going smoothly" is an ominous sign.

Anyone who thinks this is just a big-money wall street problem is in for a rude awakening. GE employs 327,000 people and how many other much smaller companies are having funding problems?

Interesting inside look at this.

http://www.democraticunderground.com/ ... w_all&address=389x4127627

An email from my corporate banker brother.... chilling


Dean,


Some thoughts...

- I dont know if the paulson plan was going to solve things long term (I'm pretty sure it wouldnt have), but it was a necessary band aid for putting 'confidence' in the markets. I'm not talking about the equity markets, I'm talking about the core liquidity markets that are the blood that keeps the heart beating. Without short term credit markets (like commercial paper), ALL credit and liquidity is left to come from banks, which are limited in how much they can provide to the market by the amount of capital they maintain. Capital is driven by size of deposits and by debt and equity issued. Unfortunately, even the best banks cant issue new debt or equity in this market (example....PNC, which is a strong bank right now, must pay 10 times what they paid 2 years ago for 5 year debt), so the weaker banks are totally screwed. Not only cant they issue new debt, they are losing deposits as customers are fleeing for fear of bank failures.

- My specific product that I manage at PNC is asset backed commercial paper (ABCP). I have been doing this for 13 years. There have been 3 days in the entire 13 years where the ABCP market was not able to operate fully for PNC. The first was 9/12/2001 (the day after 9-11). This one was purely logistical - the dealers of the ABCP were unable to get to work in New York and backup systems for offsite locations were not developed the way they are now. The 2nd and 3rd days have been this month - on 9/18 and then again today. These were not logistical - these were a result of investor strikes (money market funds are the investors in ABCP). On 9/18, we had to issue $1.1 billion of ABCP and we came up $0.2 billion short. Today, we had to issue $2.3 billion and we came up $0.5 billion short. Tomorrow we have to issue $2.4 billion....I am not sure if we will be able to issue any of it. (note: when there is a shortfall, PNC must cover the amount through a backstop loan...which again puts incredible strain on balance sheets of banks as this will be happening to all major banks, not just PNC).

- It's not the money market funds fault. They cant buy all the ABCP that needs to be sold because they are under a massive redemption siege from their investors who are pulling their money out at an alarming rate (over $400 billion the last 2 weeks has come out of money market funds). The redemptions are the immediate ripple effect from Lehman's failure. Lehman was a highly rated commercial paper issuer who went from being highly rated to bankrupt in one weekend. Money market funds who held CP issued by Lehman took losses two weeks ago - that is what spooked investors to withdraw from money market funds in general, which forces money market funds to keep more cash and treasury bills on hand rather than more fully invest in CP and ABCP.

- THIS IS THE MAJOR PROBLEM. The CP market is a $2 trillion market that provides all the grease for the operation of our economy. Without it, the economy stops. Companies WILL NOT invest or grow because they have no idea where they will borrow money from. This is a fact - I talk to companies every day and all of them have basically stopped all new projects and will not make any large strategic decisions until this settles down.

- People think this is a 'bailout' plan for Wall Street. This really has nothing to do with Wall Street at this point. If companies pull back, they cut jobs, they cut dividends, they cut spending, they pay less taxes, etc, etc, etc. Then the consumer gets the next ripple efffect because he has lost his job, cant sell his house, lost tremendous value in his 401k, etc, etc, etc.

So you asked what my gut is telling me. This is frightening to be honest - I have seen a lot of stuff, but this is unprecedented - if another big shoe drops (god forbid a terrorist attack), complete panic could ensue with people stuffing cash under their beds. No cash in the banking system would mean complete economic shutdown. Well, I have also been around enough to know that at the end of the day, the govt will figure out a way to get enough confidence back in the short term credit markets to stablize it - be it complete nationalization of our banking system. a revised paulson plan, or continued 'arranged marriages' of good banks with bad banks. That will stop the flood waters from rising, however it will not help pump the dirty water out of the system. So we wont drown, but we will be stuck in a muddy pit for awhile - at least a year - and many many companies will go under in the meantime until this 'deleveraging' of the world right-sizes itself.. I believe this could be the onset of new paradigm in how the banking system works.

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I saw this discussion today at Minyanville about the Irish guaranteeing all deposits as an alternative solution to the Bailout - liked this explanation among several:

http://www.minyanville.com/articles/index.php?a=19258

Professor Kevin Depew:

A Wolf In Sheep's Clothing
I've looked at this proposal all morning to try to understand why some think it's even slightly more helpful than the Paulson Bailout Bill, which itself is simply a disaster waiting to happen. From my perspective, I simply cannot see it.

First, let us be clear: The Irish government has nationalized that country's banking system. Any government backstop on the deposit base is nationalization, pure and simple.

Evaluating the economics of this plan, we can see how it is impossible to add 2 and 2 and arrive at a similarly workable nationalization effort here, even if such a massive nationalization attempt was desirable.

The Irish government is banking, literally, on guaranteeing 10 times their national debt and twice their economic output with this. The numbers for a similar plan here are simply astronomical. Ireland's GDP as of 2007 was about $186 billion USD, which puts their economy at roughly the size of Alabama's.

But let's assume the impossible for a moment - that this plan is workable here from an economic standpoint. The main problem is that guaranteeing deposits does not kickstart credit demand, and may not even kickstart supply, which is the real issue for the US.

No matter what deposit guarantees are put in place, the primary issue that must be accepted is that underlying collateral is declining in value - NOT because there is not enough available credit to purchase it, but because there is too much supply of it and it has been overleveraged.

Finally, and most importantly, there's the notion that guaranteeing deposits protects the saver. It most assuredly does not. A government guarantee of deposits is a con game where the depositors are reassured that their savings are safe, while the very act of guaranteeing the deposits destroys the underlying value of that which is being guaranteed.

The hard truth is that this just another wolf in sheep's clothing, a way to continue the massive transfer of wealth from those who are risk-averse to those who behave (and have long been rewarded for behaving) as if all risk is meaningless.

There are 2 realities that this country must face, and face right now. One, the size, interconnectedness and scope of the financial system puts it beyond fiscal and monetary control. Two, this debt deflation is global, secular and psychological... and unstoppable. It must be allowed to run its course.

I understand the attempts at intervention. Really, I do. But the fights over which Bailout Bill to go with and how to intervene should be seen for what they really are: In the grand scheme, simply squabbles over who gets to keep the most out of what's left over from the inevitable deflationary debt unwind. Judged through the lens of history, Lehman Brothers and Bear Stearns will be seen as arbitrary victims of these minor squabbles.

For those living in the real world on Main Street, there's a simple and clear prescription for how to manage through this deflationary debt unwind.

First, do not be fooled by political and monetary gibberish about what proposal will save us next. Instead: Get out of debt. Protect your assets. Determine the safest institutions to protect your savings. Continue to live as you always have, while keeping in mind that the people who are now entrusted with "rescuing America's economy" are the very same people who brought us to this breaking point in the economy... even as they either failed to see it coming, or, if they did see it coming, denied its existence in order to take out of it the most they could before the inevitable collapse.

At some point, a reasonable person will be forced to question either the intelligence of these people, or their committment to serving the American people.

This morning on national television, President Bush pleaded for the passage of the Bailout Bill while noting, ominously, that yesterday the stock market lost $1 trillion in value. That number is supposed to move the American people, who remain defiantly against a bailout, by stoking their fear of loss.

The question, then, after all the dire warnings, is why don't Americans care about the consequences of No Bailout? The answer is very simple: Because the vast majority of Americans have already been living with those conditions for more than 5 years now.

I call it a Stealth Depresion because it's been running so far below the radar of economic elites and the mainstream media, who prefer to report on happier things. Now that it's becoming less stealthy, there's suddenly a crisis.

Remember: Get out of debt. Protect your assets. Determine the safest institutions to protect your savings. Continue to live as you always have.

It sucks my favourite axe

I don't support the bailout, but the alternatives to this bill don't look any better. If the banks start collapsing JC will go back in time and look just like what it looked like back in the 70s and 80s, a shithole. You guys in DTJC should be on the ground begging for the bill to pass or else all that you worked for turning around your community will be out the window in a couple of months.

What we're also seeing here...and this should be a bright spot...is the final nail in the coffin of "Reaganomics"...the misguided plan for economic disaster set in motion almost 30 years ago and put on steroids over the past 8 years.

We are now witnessing "trickle down" in its fullest bloom, and it is a stinking, ugly weed indeed.

This economic rescue is unfortunately necessary right now. The house is on fire and we need to put it out first.

Moving forward, though...with the spine of republican economic policy decidedly crushed to bits (witness our paralyzed economy) the future should be much brighter with their obviously false and failed arguments permanently off the table.

The markets clearly need effective and stringent governmental oversight from here on in. Deregulation has failed. Let's turn the page.

Good oped piece in the times.

Revolt of the Nihilists
By DAVID BROOKS
In 1933, Franklin Roosevelt inherited an economic crisis. He understood that his first job was to restore confidence, to give people a sense that somebody was in charge, that something was going to be done.
This generation of political leaders is confronting a similar situation, and, so far, they have failed utterly and catastrophically to project any sense of authority, to give the world any reason to believe that this country is being governed. Instead, by rejecting the rescue package on Monday, they have made the psychological climate much worse.
George W. Bush is completely out of juice, having squandered his influence with Republicans as well as Democrats. Treasury Secretary Henry Paulson is a smart moneyman, but an inept legislator. He was told time and time again that House Republicans would not support his bill, and his response was to get down on bended knee before House Speaker Nancy Pelosi.
House leaders of both parties got wrapped up in their own negotiations, but did it occur to any of them that it might be hard to pass a bill fairly described as a bailout to Wall Street? Was the media darling Barney Frank too busy to notice the 95 Democrats who opposed his bill? Pelosi?s fiery speech at the crucial moment didn?t actually kill this bill, but did she have to act like a Democratic fund-raiser at the most important moment of her career?
And let us recognize above all the 228 who voted no ? the authors of this revolt of the nihilists. They showed the world how much they detest their own leaders and the collected expertise of the Treasury and Fed. They did the momentarily popular thing, and if the country slides into a deep recession, they will have the time and leisure to watch public opinion shift against them.
House Republicans led the way and will get most of the blame. It has been interesting to watch them on their single-minded mission to destroy the Republican Party. Not long ago, they led an anti-immigration crusade that drove away Hispanic support. Then, too, they listened to the loudest and angriest voices in their party, oblivious to the complicated anxieties that lurk in most American minds.
Now they have once again confused talk radio with reality. If this economy slides, they will go down in history as the Smoot-Hawleys of the 21st century. With this vote, they?ve taken responsibility for this economy, and they will be held accountable. The short-term blows will fall on John McCain, the long-term stress on the existence of the G.O.P. as we know it.
I?ve spoken with several House Republicans over the past few days and most admirably believe in free-market principles. What?s sad is that they still think it?s 1984. They still think the biggest threat comes from socialism and Walter Mondale liberalism. They seem not to have noticed how global capital flows have transformed our political economy.
We?re living in an age when a vast excess of capital sloshes around the world fueling cycles of bubble and bust. When the capital floods into a sector or economy, it washes away sober business practices, and habits of discipline and self-denial. Then the money managers panic and it sloshes out, punishing the just and unjust alike.
What we need in this situation is authority. Not heavy-handed government regulation, but the steady and powerful hand of some public institutions that can guard against the corrupting influences of sloppy money and then prevent destructive contagions when the credit dries up.
The Congressional plan was nobody?s darling, but it was an effort to assert some authority. It was an effort to alter the psychology of the markets. People don?t trust the banks; the bankers don?t trust each other. It was an effort to address the crisis of authority in Washington. At least it might have stabilized the situation so fundamental reforms of the world?s financial architecture could be undertaken later.
But the 228 House members who voted no have exacerbated the global psychological free fall, and now we have a crisis of political authority on top of the crisis of financial authority.
The only thing now is to try again ? to rescue the rescue. There?s no time to find a brand-new package, so the Congressional plan should go up for another vote on Thursday, this time with additions that would change its political prospects. Leaders need to add provisions that would shore up housing prices and directly help mortgage holders. Martin Feldstein and Lawrence Lindsey both have good proposals of the sort that could lead to a plausible majority coalition. Loosening deposit insurance rules would also be nice.
If that doesn?t happen, the world could be in for some tough economic times (the Europeans, apparently, have not even begun to acknowledge their toxic debt) ? but also tough political times.
The American century was created by American leadership, which is scarcer than credit just about now.

Okay, that was my mistake. I wasn't trying to spin it. He had to DELAY the speech because his prepared remarks were going to be:

Obama's prepared remarks, from earlier today in Colorado.

And today, Democrats and Republicans in Washington have agreed on an emergency rescue plan that is our best and only way to prevent an economic catastrophe.


So either way, he was under the impression that this bill was going to pass. Minutes before the speech, he had to change the telepromter feed.

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Can you please stop twisting the facts to suit your politics? It may work for people who are casual observers, but for people who follow what is going on, your attempts to muddy the waters are not appreciated. Obama delayed going on stage before the voting had finished and in fact was on the phone with Paulson & then Pelosi prior to making a statement. These facts can be found Here (LA Times), Or Here (Guardian UK), Or what about Fox News? Surely if what you said was true, Fox would jump all over it, but they too concur that Obama was urging voters to calm down and not trying to fix blame on anyone or take credit for something that he never did.

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Let's let the republicans make my point for me: Republicans made a "stupid claim" about Pelosi's speech

I love a good debate as much as the next guy, but try to stick with the truth...

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I am not letting McCain off the hook. But Democrats are saying it is McCain's fault. Obama had made a speech minutes before the vote, and he was saying the bill was going to pass as well. My only point is, what was the point of the speech? Why would the SPEAKER of the House get up and make such a speech when other Democrats and Republicans had been saying that they had come together to draft this bill?

Well Put!

I bet it'll be a landslide for Obama!

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I have nothing to say about the content of her speech, i didn't hear it, but to have members of the Republican party stand in front of microphones holding copies of her speech and saying "this is why i didn't vote for this bill"... that is mind boggling! I didn't realize her speech was part of the text of this bailout bill... I didn't realize her speech was becoming law! Who gives a sh*t what that gas-bag has to say about the bailout!? Perhaps you can help me out with that Mr. Hill Staffer - what part of her speech makes it into the bill?

Welcome to the joys of our system - Republicans won't pass the measure because they are worried about their reelection campaigns. Dems won't come out for it because they're worried abou their campaigns - so what gets done? Nothing.

You must not have a read any of my prior posts - "there is something for EVERYONE to hate in this bill" - Democrats hate bailing out fat-cats on wall street and republicans bemoan the socialization of the financial system. When you get Dennis Kucinich & House republicans on the same side of a bill that ought to tell you something.

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How can you not point some of the blame to McCain - they announced a deal on Thursday, John McCain shows up and blows it up. McCain and his surrogates were claiming victory prior to vote, crowing on network television about how the American people have John McCain to thank for getting this done. He put "country first" and solved the financial crisis! And then has the nerve to say that Obama injected partisan politics into the process! It's laughable.

NO BAILOUT. . . MARKETS CRASH
Hudson Dems split on $700B economy plan

Tuesday, September 30, 2008
By PAUL KOEPP
JOURNAL STAFF WRITER

Hudson County's congressional delegation was split on yesterday's vote that sent the $700 billion financial bailout and the stock market down in flames.

U.S. Rep. Albio Sires, D-West New York, voted for the plan, while Congressmen Steven Rothman, D-Fair Lawn, and Donald Payne, D-Newark, opposed it.

Sires, speaking just after returning to New Jersey yesterday afternoon, depicted a crazy day on the House floor, with lawmakers scrambling to figure out what the tally would be while considering how to vote.

"It was almost chaotic. Everybody's keeping an eye on the board," he said. "Everybody's upset the Republicans only delivered 65 votes. The Democrats took a tough vote."

He said that while the legislation was "not perfect," it contained most of the provisions he wanted, including close oversight, restrictions on executive compensation, foreclosure protections and equity in bailed-out companies for taxpayers.

Sires added that he felt it was important to vote for the plan because so many of his constituents, especially in Hoboken and Jersey City, work in the financial industry. He said he expects to be called back to Washington on Thursday for another vote.

But Rothman said in a statement that he's "highly skeptical of President Bush's sky-is-falling message" at the end of a congressional session and just before the presidential election.

"One has to wonder why the president, his Treasury secretary, Federal Reserve chairman, and Securities and Exchange Commission chairman did not know of the alleged financial crisis for the past 71/2 years," he said. "We should not be stampeded into approving this lemon of a Wall Street bailout."

A spokeswoman for Payne said his vote was "a strong no."

"I could not in good conscience vote for a bill which would require my constituents to pick up a tab run up by wealthy Wall Street executives," Payne said in a statement. "While all of us want to resolve this financial crisis, we should remember that we got to this point because the Bush administration refused to properly monitor the financial sector of our economy for years."

After the bailout failed, 228-205, the Dow Jones industrials plunged 777 points in their largest one-day point drop ever. The blue chip index passed by far its previous record for a one-day drop, 684.81, set in the first trading day after the Sept. 11, 2001, terror attacks.

In another sign of the nation's troubled financial system, Wachovia Corp., one of the biggest banks to struggle due to rising mortgage losses, was bought out by Citigroup Inc.

But locally, the Provident Bank, based in Jersey City, said it remains strong despite the difficulties of the wider economy.

"We did not get caught up in exotic lending and investing practices," said bank president Chris Martin.

The Associated Press contributed to this report.

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SLyng, I thought Pelosi was a horses a$$ before the vote. But do you really think her speech was necessary? And if she felt so strongly against this bill, why would she vote for it? I love how the Democrats keep saying, everyone has a gun to their head. This is politics. They are in control of the house and the Senate. They could come up with their own bill, get the American people behind them, and make Bush look foolish if he didn't sign it into legislation.

I know exactly what is going in Capital Hill. I worked there. But I have a feeling that the chambers had a few people in it when Pelosi made this speech. What was her point in that rant? But, what do you expect from a leader of the "do nothing" congress.

There is no way you can blame this on John McCain. If the Democrats really believed in this, they could have passed it themselves. They didn't need Republicans behind them.

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Please don't call me a *oops* and quit the board for me saying this but I have to disagree. The deal as I see it is that the Democrats don't want to pass this with too many Dem votes. (They don't want Republicans to be able to blame a bad bill on them.) So as they near the voting process it's political theater with Reps deciding who gets to be the hero for voting for the bad bill and who gets to be the hero for voting against the bad bill. I say Nancy Pelosi's Hulk Hogan moment was bad timing at best. (I haven't been a fan of hers since she held a fundraiser with lobbyists the week after the 2006 elections.)

The WWE may be goofy but at least they follow a coherent script.

Wow, massive Dan Quayle acid flashbacks. Which is weird, because I was 13 at the time - what was I doing with acid?!

You know what we could use? Some sage advice from Sarah Palin (can't remember if this was posted or not, but it pertains directly to the bailout). She'll know just what to do. Katie Couric's first question here is "if it doesn't pass, what are the alternatives?" -- Have no fear, Sarah's got some knowledge to drop on that ass!:
Watch CBS Videos Online

I'm of the belief that average Joe working class stiff is blue collar with low level white collar managers. I'm also of the belief they don't have shares or bonds and don't give 2 hoots for them.
Their only concern is paying the mortgage, educating their kids, protecting their family with health insurance and would jump for joy if Wall St imploded.

When siht hits the fan, they will drop the health insurance and the loop-hole will be to take travel health insurance for a month, head north or north-east and get fixed-up abroad...People have been doing it for years.

Foreclosures by average Joe working class will only bury Wall St further. No bailout will decrease their monthly mortgage.

I look forward to seeing a siht load of prestige cars and McMansons up for sale at dirt cheap prices !

The repo business must be rubbing their hands and business will boom.

Sadly, I think you might be right about this. I almost feel as though someone has kidnapped our children for the third time, and now we're saying "Screw those idiots and their ransom demands. I've had enough. They can KEEP the kids!"

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This post made me laugh the most... Are you serious? You think any of them give (half) a sh*t what Pelosi has/had to say about the bailout? In case you're not aware, most of the time when C-Span plays "debates" in congress, they only use one camera angle and what you can't see is that the ENTIRE chamber is usually empty. They don't give a sh*t about debate, they all already have their opinions. So if you think it was Nancy Pelosi who derailed this thing, you're delusional.

In anycase, the bailout didn't happen and a trillion dollars of market value is lopped of the US stock market. But, hey, thank god we didn't authorize the bailout - we sure showed those greedy wall-street types! Did anyone notice that Wachovia's stock went from $10/share to less than a dollar (think it finished around $2 right?). Here are some other highlights from your favorite regional banks:

NCC - Nat City... down 63%
SOV - Sovereign Bank - down 72%
Key - Keybank down 33%
FITB - Fifth Third Bancorp - down 36%
FED - First Fed Financial - down 44%

And as Barney Frank so aptly put it (paraphrasing): "the entire country must suffer because certain republican's feelings were hurt". You see, what these fools in congress (and some of you) don't seem to get is that many of these things we take for granted have been farmed out to wall street. Credit Cards, Student Loans, and quite a bit of Standard Lending has been and indeed relies on securitization (that is pooling the loans, getting them off the balance sheet, and then selling the securities to investors, thus replenishing banks balance sheets with the cash paid for these securities). Once these things are off banks balance sheets they can lend for other things -- auto loans, lines of credit for small businesses, etc etc. It's nice to get paid right? Well if your employer relies on a small business line of credit for payroll, that could cause you a problem if their bank fails to lend them that money. It's not just about big investment banks, this affects or could affect all of us.

The great thing about this bill is that there's something in it for EVERYONE to hate! Why do you think 30-40% of democrats opposed it and 67(?)% of Republicans opposed it? Why do you think all the ideologues on this website who post on the John McCain and Sarah Palin threads on JCList have NOTHING to say about this bailout? It's a flawed solution to a systemic problem, but doing nothing is not a good idea (as you saw today with a 7% drop in the dow and a 9% drop in the Nasdaq).

I've already explained (in many posts earlier in this thread) why i think the bailout is a good idea, but if you'd prefer a deep recession, great, lets do it!

Oh, and PS - I'm really glad that John McCain suspended his campaign to solve this problem... he certainly helped move things along. Way to go John!

What's funny is that a lot of the voters mentioned about how their constituents urged them not to vote for the bailout. But what the constituents don't understand is how much it can affect them as well. The media calls it a Wall St bailout, but the bailout will also affect all regional banks... as lending comes to a halt, these people will see their credit lines decrease as well as financing for cars, appliances, homes, etc.

If I recall a lot of these people are already using credit to pay bills...

I'm not an enormous fan of Michael Moore's, but I do think his take on this mess has some validity:

http://www.michaelmoore.com/words/message/index.php?id=235

Based on the Dow Jones Wilshire 5000 Index, almost $1.3 trillion was erased from the value of U.S. stocks today. That's the most ever for that index and almost double the size of the bailout authority Paulson is requesting from lawmakers.

I think the premise of a bailout is wrong. This is morally equivalent to someone who goes to Vegas, wins millions of dollars, and then goes back and loses those millions, and then asks the government for help. That being said, the government cannot just let Wall St. fail. These firms employ thousands of people. Not only that... the existance of these firms are essential to consumer credit. We can't go back in time and stop predatory lending, irresponsible borrowing and rating agencies misleading investors - so I think the bailout is essential to stop the bleeding. Yes, I do think that the firms who take the bailout should have to surrender a significant amount of their profits, which would in turn limit pay. And they should be heavily regulated. As much as I think it might be a moral hazard, I think it is much better than the alternative.

yeah I'm just done - stick a fork in me. I cannot watch or listen to this any longer. I think I may be going crazy - the election and the economy - I am really thinking that all of this is planned.

And for that matter...all of Washington. They should be all thrown out of office. They don't care about us. It is all about getting re-elected.

I think both sides are jockeying for a win in November using the bailout issue as a way to get that win.

It is like watching a train accident in slow motion.

Unbelievable.