Rolling US Economy Into The Shitbin Thread

"effectively brokered"

glenn greenwald has a really long-winded-as-usual take on this, but especially biting. lol socialism for the rich.

does anybody else feel like taking a field trip to connecticut and chucking molotovs at houses?

Greenwald says this should be pitchforks in the street time, but who is going to provide that kind of leadership? I find it hard to believe that a mass movement against socialism for the rich (an apt name) is going anywhere in today's USA.

Yeah, everytime I imagine ruining these little shits' lives with a well-placed firebomb or bat to the face, I remember that it doesn't actually fix the problem, because this is systemic fuckery that's been going on for at least 40 years.

can someone explain the logic behind the argument that the democrats somehow 'caused' the collapse? fannie and freddie gave lots of money to dodd, so was he in some way looking the other way?

^^ typical democrat

This is the problem with the party allegedly looking after the little guy being a bunch of bullshit oligarchs.

sorry, i dont mean to be dem cheerleader here - i know that the dems are culpable too in this shitpile. what i meant was more how the democrats are specifically being called out over at the corner for originating this problem where the republicans were merely going along with it w/out making any noise

An Israeli leftist commentator takes the opportunity to say "a little more Europe, a little less America" wrt their economy.

http://www.haaretz.com/hasen/spages/1022593.html

I'm guessing many other countries are also seeing this crisis as strengthening the case against American-style capitalism.

Hurting, I think many other Western countries have embedded a form of "American-style capitalism" in their own economy, but in a less extreme way. Just like the huge burgers and cokes America has, America has economically totally gone over the top. Being Dutch, I simply can't understand how America totally lost control on their own economy. Well, in hindsight I can understand it, but it baffles me to see what really happened. All these loans to people who can't afford it, cutting taxes while you're in a money-eating war that's really hungry, etc. etc.

Here, there are mechanisms built in to prevent things going haywire. Sure The Netherlands is a free-market capitalist country like all countries on the Western hemisphere, but it is so up to the point where capitalism gets unacceptably unfair, unnecessarily dangerous, for both citizens and companies. There's a register here that keeps track of someone's loans and debts. Only financial organisations - our you yourself - are allowed to check this, to see if you're 'credit worthy'. Banks can't exactly see how much you owe, but they get a code when trying to sell a mortgage to someone. If it's the wrong code - because someone already has way too much debts to pay for or another mortgage running that proves difficult to pay off - the system simply will not allow a bank to sell an insurance/mortgage to that person. Isn't there anything like this in America?

So I agree with Haaretz' commentator. And I also completely understand how Obama is trying to point out that America let capitalism spin out of control. Unfortunately it's the socialist 'the state will nurture' notion that will easily be thrown back at Obama by McCain, I'm sure.

Hmmm.

"In one of the most sweeping changes on Wall Street in decades, Goldman Sachs and Morgan Stanley, the last two independent investment banks, will become bank holding companies, the Federal Reserve said Sunday night.

The move fundamentally changes one of the mainstay models of modern Wall Street, the independent investment bank. It heralds new regulations and supervisions of previously lightly regulated investment banks. It is also the latest signal by the Federal Reserve that it will not let Goldman or Morgan fail."

http://dealbook.blogs.nytimes.com/2008/09/21/goldman-morgan-to-become-bank-holding-companies/

http://farm3.static.flickr.com/2151/2275893495_7388bc8b23_o.jpg

Banks can't exactly see how much you owe, but they get a code when trying to sell a mortgage to someone. If it's the wrong code - because someone already has way too much debts to pay for or another mortgage running that proves difficult to pay off - the system simply will not allow a bank to sell an insurance/mortgage to that person.

We have credit agencies that rate your alleged credit-worthiness based on a variety of factors. These have their own serious flaws, which I won't get into, but the loan system is still voluntary -- I mean any institution giving a loan can and should and generally does look at the borrower's credit, but there's nothing actually stopping anyone from making whatever loan to whomever they wish. What happened here was that the people approving or arranging the loans had no responsibility to the institutions making the loans, and then the institutions making the loans often sold the debts to others who had no idea what they were actually buying because the turd debts were sliced up into tiny little pieces and wrapped in gold foil.

Pelosi Statement on Legislation to Address Crisis in Financial Markets

Washington, D.C. — Speaker Nancy Pelosi issued the following statement today as Congress and the White House work to craft legislation to address the crisis in our financial markets:

“Congress will respond to the financial markets crisis by taking action this week in a bipartisan manner that will protect the taxpayers’ interests. The Administration’s $700 billion proposal does not include the necessary safeguards. Democrats believe a responsible solution should include independent oversight, protections for homeowners and constraints on excessive executive compensation.

“We will not simply hand over a $700 billion blank check to Wall Street and hope for a better outcome. Democrats will act responsibly to insulate Main Street from Wall Street.

“As we proceed to deal with this crisis, this is clear recognition that the party is over for the Bush Administration’s anything goes, failed economic policies that have damaged our economy, undermined the middle class and further pointed out the need for a New Direction.”

hell yes!

http://www.opednews.com/articles/The-Middle-Class-Must-Not-by-Bernie-Sanders-080921-17.html

The Middle Class Must Not Be Forced to Bail Out Wall Street Greed

by Bernie Sanders

For years, as a member of the House Banking Committee and now as a member of the Senate Budget Committee, I have heard the Bush Administration tell us how “robust” our economy was and how strong the “fundamentals” were. That was until a few days ago. Now, we are being told that if Congress does not act immediately and approve the $700 billion Wall Street bailout proposal these “free marketers” have just written up, there will be an unprecedented economic meltdown in the United States and an unraveling of the global economy.

This proposal as presented is an unacceptable attempt to force middle income families (and our children) to pick up the cost of fixing the horrendous economic mess that is the product of the Bush Administration's deregulatory fever and Wall Street's insatiable greed. If the potential danger to our economy was not so dire, this blatant effort to essentially transfer $700 billion up the income ladder to those at the top would be laughable.

Let us be clear. If the economy is on the edge of collapse we need to act. But rescuing the economy does not mean we have to just give away $700 billion of taxpayer money to the banks. (In truth, it could be much more than $700 billion. The bill only says the government is limited to having $700 billion outstanding at any time. By selling the mortgage backed assets it acquires -- even at staggering losses -- the government will be able to buy even more resulting is a virtually limitless financial exposure on the part of taxpayers.) Any proposal must protect middle income and working families from bearing the burden of this bailout.

I have proposed a three part plan to accomplish that goal which includes a five-year, 10% surtax on the income of individuals above $500,000 a year, and $1 million a year for couples; a requirement that the price the government pays for any mortgage assets are discounted appropriately so that government can recover the amount it paid for them; and, finally, the government should receive equity in the companies it bails out so that when the stock of these companies rises after the bailout, taxpayers also have the opportunity to share in the resulting windfall. Taken together, these measures would provide the best guarantee that at the end of five years, the government will have gotten back the money it put out.

Second, in addition to protecting the average American from being saddled with the cost, any serious proposal has to include reforms so that we end the type of behavior that led to this crisis in the first place. Much of this activity can be traced to specific legislation that broke down regulatory safety walls in the financial sector and allowed banks and others to engage in new types of risky transactions that are at the heart of this crisis. That deregulation needs to be repealed. Wall Street has shown it cannot be trusted to police itself. We need to reinstate a strong regulatory system that protects our economy.

Third, we need to address the needs of working families in this country who are today facing very difficult times. If we can bail out Wall Street, we need to respond with equal vigor to their plight. That means, for example, creating millions of jobs through major investments in rebuilding our crumbling infrastructure and creating a new renewable energy system. We must also make certain that the most vulnerable Americans don’t freeze in the winter or die because they lack access to primary health care.

Finally, we need to protect ourselves from being at the mercy of giant companies that are "too big to fail," that is, companies who are so large that their failure would cause systemic harm to the economy. We need to assess which companies fall into this category and insist they are broken up. Otherwise, the American taxpayer will continue to be on the financial hook for the risky behavior, the mismanagement, and even the illegal conduct of these companies' executives.

These are the last days of the Bush Administration, the most dishonest and incompetent in modern American history. It is imperative that, at this important moment, Congress stand up for the middle class and for fiscal integrity. The future of our country is at stake.

Bernie Sanders is the independent U.S. Senator from Vermont. He is the longest serving independent member of Congress in American history. He is a member of the Senate's Budget, Veterans, Environment, Energy, and H.E.L.P. (Health, Education, Labor, and Pensions) committees.

http://rawstory.com/news/2008/Despite_economic_slowdown_defense_contractors_and_0414.html

"Days before the collapse of Bear Stearns, the bank’s chairman, James E. Cayne, paid $25 million for a 14th-floor condo at the Plaza Hotel," the New York Times' Christine Haughney and Eric Konigsberg reveal Monday.

You might expect Cayne to be hiding from the financial crowd after Bear Stearn's collapse. He's not.

He's "invited to a May 10 party at the Plaza," Haughney and Konigsberg write. "It will feature a dozen female string musicians made up to look like statues and clothed in dresses of fresh flowers, like roses and gardenias. There will be caviar and Cognac bars, as well as a buffet designed to visually replicate 17th-century Dutch paintings from the recent Metropolitan Museum of Art exhibit, “The Age of Rembrandt.”

Cayne stepped down to become non-executive chairman in January. He will become "one of the bank's top 'rainmakers,' working with key clients on mergers and acquisitions and other high-profile deals," according to the British Telegraph.

So farewell then, high risk investment banking, we hardly knew ye.

hmm, wonder if the US could lose AAA status

http://ftalphaville.ft.com/blog/2008/09/22/16195/downgrading-the-usa/

Wonder if this has something to do with the large bounce in the pound vs dollar over the weekend. Although a flight to the pound seems a little foolish right now.

I hate to second-guess the democrats right now, but

1) Wouldn't taxpayers be even more on the hook if this bailout didn't go through? I.e. wouldn't we all be fucked if our financial system collapsed?

2) Do democrats really think they can add adequate relief and regulatory provisions to an emergency bill like this? I mean this:

"The Administration’s $700 billion proposal does not include the necessary safeguards. Democrats believe a responsible solution should include independent oversight, protections for homeowners and constraints on excessive executive compensation."

sounds like empty positioning to me. I don't see how all those things could be done in one fell swoop with a bill that needs to go through as quickly as this.

1. The bailout is going through largely intact. The only question is what goodies get added, and if it's a bill in Congress, there will be goodies.
2. Democrats would be stupid not to politicize this issue, even if it's just formal DC posturing. This is an incredible opportunity for Democrats (and to some degree, Republicans) in Congress and they know it.

Although a flight to the pound seems a little foolish right now.

Talking of contrarianism: Does it make sense to hold yen now? I'm kind of unsure about this but was/is the yen carry trade a contributory factor to the glut of credit over the last 30 or so years? If that all goes in reverse does it then make sense to hold yen?

"Days before the collapse of Bear Stearns, the bank’s chairman, James E. Cayne, paid $25 million for a 14th-floor condo at the Plaza Hotel," the New York Times' Christine Haughney and Eric Konigsberg reveal Monday.

You might expect Cayne to be hiding from the financial crowd after Bear Stearn's collapse. He's not.

He's "invited to a May 10 party at the Plaza," Haughney and Konigsberg write. "It will feature a dozen female string musicians made up to look like statues and clothed in dresses of fresh flowers, like roses and gardenias. There will be caviar and Cognac bars, as well as a buffet designed to visually replicate 17th-century Dutch paintings from the recent Metropolitan Museum of Art exhibit, “The Age of Rembrandt.”

Jesus fucking christ.

I hate to second-guess the democrats right now, but

1) Wouldn't taxpayers be even more on the hook if this bailout didn't go through? I.e. wouldn't we all be fucked if our financial system collapsed?

2) Do democrats really think they can add adequate relief and regulatory provisions to an emergency bill like this? I mean this:

"The Administration’s $700 billion proposal does not include the necessary safeguards. Democrats believe a responsible solution should include independent oversight, protections for homeowners and constraints on excessive executive compensation."

sounds like empty positioning to me. I don't see how all those things could be done in one fell swoop with a bill that needs to go through as quickly as this.

― Everything is Highlighted (Hurting 2), Monday, September 22, 2008 6:20 AM (1 hour ago) Bookmark Suggest Ban Permalink

did u read greenwald's piece on this bill??

not saying thats neccessarily what the dems are thinking of, maybe it is just empty positioning/political posturing, but it seems to me there is nothing time consuming about adding oversight to a bill that essentially gives the treasury a blank check w/ zero oversight

an unelected treasury official at that. It's a fucking disaster in the making, an egregious handout with no strings attached. It's lighting money on fire, and the clowns that caused the problem will get to keep their jobs. Elected and otherwise.

The current plan is vague, opaque, has almost no oversight, puts the taxpayers at extreme risk and encourages future moral hazard.

is the best fix for the bailout to demand equity from the bailed out companies? ie buying them not just their bad paper

I don't know, but the banks so desperate that the govt. doesn't even need to work out the details now. They can just say "we reserve the right to take an equity stake in your business at a time of our choosing, and add whatever regulations to your business that we feel like, when we feel like it" or some shit. What're the banks gonna do?

yr talking abt in some hypothetical situation where the bankers and the regulators arent the same people right

I'm talking about the Congress.

instead of buying up the banks worthless loans so they can keep lending - the gov should let them fail and start its own megabank

i do look forward to the day when congress stands up to the inane policies of the bush admin - not holding my breath tho

You've got a couple of months, you can live.

so i should start holding my breath then

Bill Kristol and Paul Krugman in agreement shockah!

oh man this graph from kristol o_O

It’s not that I want to insist on some sort of ideological purity or free-market fastidiousness. I will stipulate that this is an emergency, and is a time for pragmatic problem-solving, perhaps even for violating some cherished economic or political principles. (What are cherished principles for but to be violated in emergencies?)

i mean J/K GUYS MY SHIT DOESNT REALLY WORK LOL

I dipped into the Corner for the first time in a while and they're, how you say, unsettled.

I mean, in between complaining about Obama ads and talking about how wonderful it is that Sarah Palin gets to meet Bono.

palin/bono '12

Gingrich's post yesterday afternoon pointedly reminded the lemmings that, had this happened under a Democratic administration, House whips would already be marshaling protests.

Said post.

o how the gop would howl

Of all people, Mr. Newt Gingrich disagreeing with "the administration's," plan:

http://corner.nationalreview.com/post/?q=ZGE5MmE0YmRiODA3YTRiNzFlN2FmNDU5N2I0ZDc3YTE=

But because this gigantic power shift to Washington and this avalanche of taxpayer money is being proposed by a Republican administration, the normal conservative voices have been silent or confused.

It’s time to end the silence and clear up the confusion.

---

Is our $700 billion going to be spent in "secret" too? In practical terms, will a bill be written in public so people can analyze it? Or will it be written in a closed room by the very people who have been collecting money from the institutions they are now going to use our money to bail out?

Haha big x-post w/ Alfred

and Ned

i got all bummed this morning that the good new restaurants and cafes around my girlfriends apt in bed-stuy are gonna go out of business pretty soon