Rolling US Economy Into The Shitbin Thread

Thanks. I'm just as riled up! No hard feelings!

You're a gentleman, and I was totally an ass.

The "round-up of sobering news" tipsy mothra linked upthread is actually a REALLY good summary of the "what" of what's happening. The "why" is that everyone is terrified that a dollar lent to *anyone* right now, under any terms, is a dollar they'll never see again.

It may seem like ancient history, but if you haven't read it I'd really recommend LIAR'S POKER right now. It's well-written and entertaining and turns out now in retrospect to offer a pretty direct look into the early days of the mortgage-backed security.

Excellent book -- Michael Lewis's first, if I remember right. I still have a copy around somewhere, I think.

When Genius Failed, about Long Term Capital Management, gives a decent overview of how hedge funds work, what it means to say a firm has gotten too big to fail, and how that comes about. A problem with the bailout is that there's no reason to expect it will discourage more firms from getting too big to fail.

Will the whole economy really collapse if we take another week to figure this crisis out better?

LOL this is going to turn into the Michael Lewis C/D, S/D thread...

That meme about CRA is not going to stick with all those lower middle class white folks who all know someone in their family/peer group with an unsustainable mortgage given to them by an unscrupulous loan officer sharking for another commission. My mother had to debunk that one for the person in our family who did this and was having a Do Not Look In Mirror moment because (this is uncharacteristic, but also never thought I'd hear this rel say he'd never vote for a black guy) pointy-finger so much easier.

When discussing with distaff parent we did speculate on whether or not all the constituent pressure is the real cat amongst pigeons here; voters were actually doing what they SHOULD do WRT their government and in effect keeping Congress hanging until the bill presented is livable-with.

Obama is behaving like someone who is working towards a solution, not necessarily the particular bailout on offer at present.

good god the CRA meme is fucking infuriating.

― goole, Monday, September 29, 2008 10:25 AM (Yesterday)

keep a tally of anyone and everyone who says this and believes it: racists, all of them.

though in the olden days, when hard times hit these kinda people would storm into the ghetto and start torching the roofs, so i guess it's some improvement.

― goole, Tuesday, September 30, 2008 3:42 PM (59 minutes ago) Bookmark Suggest Ban Permalink

my boss was talking about it yesterday--for him it seemed less "racism" and more "clinton's fault" but he made sure to specify that it was minority homeowners who were receiving the mortgages. i would have said something, but, uh, hes my boss, and im a wuss.

three sentence answer:

CRA was passed in 1977, Clinton was president eight years ago, the housing boom took off in the last eight years and the crash is happening now.

CRA covers banks, not mortgage lenders like countrywide.

mortgage lenders got into subprime because it was making them money, not because clinton forced them to, or to be PC.

YES. This. Thank fuck my mother knows all of these answers are correct.

o come on max u missed the perfect opportunity to call yr boss a racist get fired sue the company and sit out the great depression II burning trees and eating pizza

http://pageoneq.com/news/2008/Fundamentalists_blame_Wall_Street_0930.html

The Nation Will Right Itself If It Fixes Sex

"Doctor, my sex broke."

Bottom line (and not hindsight - I was saying this in 2003!): appropriate control of the money supply in 2003/2004 would have headed this off but there was way too much pressure on the fed to not turn the lights out on everyone's big party, especially with an election coming and a war on and all.

what the public thinks:

http://people-press.org/report/455/bailout-plan

and awaaaaaaay we go:

Cities, states and other local governments have been effectively shut out of the bond markets for the last two weeks, raising the cost of day-to-day operations, threatening longer-term projects and dampening a broad source of jobs and stability at a time when other parts of the economy are weakening.

The sudden loss of credit, one of the ripple effects of the current financial turmoil, is affecting local governments in all parts of the country, rich and poor alike. In New York, a real estate boom has suddenly gone bust. Washington has shelved a planned bond offering to pay for terminal expansion and parking garages already under construction at Dulles and Reagan National Airports.

Billings, Mont., is struggling to come up with $70 million more for a new emergency room. And Maine has been unable to raise $50 million for highway repairs.

“We really are in terra incognita here,” said Robert O. Lenna, executive director of the Maine Municipal Bond Bank, which helps that state’s towns and school districts raise money. He said he had worked in public finance for 34 years and had never seen credit evaporate so completely.

http://www.motherjones.com/kevin-drum/ in general

http://web.archive.org/web/20010211134621/www.investmentrarities.com/thebestofdn2.html

So, does anybody else find any fault with my plan to ride all this out with plenty of cheap beer and whatever old doctor who serials I can "acquire"?

At this point, I think it's the only proper course of action.

OK so here's a plan: We let the banks fail or suceed by the rules that are in place and look at better financial regulation. We take the $700bn, and more and set up an economic development bank to which states, enterprises and individuals can come for capital to create jobs. In return for this capital, equity has to go to individual workers and to a new universal pension scheme to compensate for the fact that people's 401k's have been hosed. People should be encouraged to buy further into the pension scheme, and to save with the cast iron guarantee of a government backed bank to keep the capital flowing into the bank.

I am a crazy pinko though so this will never fly and my office is in London whereas Goldman's is just along from the Oval.

Against the bailout because think it will be worse than what it is supposed to cure. How is this supposed to cure the excessive borrowing and saving of the last decade? the cure is somehow more of the same? Freeing up the credit system is surely just trying to put is back where we were, in a malstructured economy and postponing all this until a later date with an even bigger problem down the line? How does this change anything or address any of the fundamental problems of the economy. The fact is the badness of the system needs to be purged. It was postponed after 9/11 to give an illusion of prosperity but came back to hit us much later down the line and much bigger than it would have been if we had taken the medicine then, and now we want to do the same again. And with what consequence for the dollar?

Agreeing mainly with Aimless on this thread, and it is putting us between a rock and hard place, and saying no the bailout is also going to be a painful scenario but think it just needs to be met head on. hair of the dog never solves a hangover

Is the goal really to get back to an era of too-cheap and too-easy credit? I don't really buy that.

The goal is to get back to where we were before. Cheap and easy credit has be fuelling unsustainable growth for a decade and allowing government and industry to ignore serious economic structural problems (such as how to pay for the demographic time bomb)

Is the goal really to get back to an era of too-cheap and too-easy credit? I don't really buy that.

depends on your definition of too cheap and too easy but yes I think this is exactly what they are trying to do.

Can we get a sound effect for this morning's DJIA?

(someone should do a sound art project where they use the DJIA graph since inception since as a sound wave)

http://www.sadtrombone.com/

All that Baby Boomer 401(k) dough will be getting pulled from the markets in the coming years. Either this volatility will motivate folks to wait, or else to cash out.

Ok, I'm becoming convinced that national action is wise. This NY Times article explains the credit problems pretty clearly.

And this (behind firewall) hits closer to home for me:

"Wachovia bank has frozen the accounts of nearly 1,000 colleges, leaving institutions unable to access billions of dollars they depend on for salaries, campus construction, and debt payments.

The freeze, which affects most institutions that invest their endowment income and other assets through Commonfund, has some colleges worried that they won’t be able to make payroll this period, said Verne O. Sedlacek, president and chief executive of Commonfund, which manages investments for nonprofit institutions. Many colleges use the organization's short-term investment fund for operating expenses, “almost as a checking account,” he said.

Unless the credit markets thaw, enabling a new trustee to sell more of the short-term securities in the fund, colleges won’t be able to access all their money until at least 2010...."

Anyone seen this video? I've gotten several copies emailed to me today.

Tom Vu called it over a decade ago.

Tom Vu calledhit it over a decade ago.

Ed and Kondratieff are way off base here - are you guys paying any attention to what's going on in terms of interbank and municipal credit?

No one (except for maybe a few out of work real estate agents) is looking to roll back to 2005, and 700bn wouldn't be nearly enough if they were. This move is intended to improve circulation before we rupture an artery. Nothing more (except for a bunch of new tax credits to help the House Republicans save face and get in line).

Derailing the corporate-sponsored Capitol train to 'fuck you':

The Illinois senator and his pretend-opponents in the other business party just had their colluding asses kicked by the most motley, disorganized crew imaginable: the American public, who bombarded their legislators with threats of retaliation in November if they bowed to Wall Street's extortionist demands.

Never has Republican-Democratic co-subservience to finance capital been on such naked display. But then, "We the People" have never before been witness to the terminal unraveling of late-stage global finance capital. When the New York Times features no less than three articles declaring the nation's investment bankers ready for burial, as did last Sunday's paper, it is time for the Democrats, especially, to find another paymaster.

http://www.counterpunch.org/ford10012008.html

http://www.charlierose.com/shows/2008/9/30/1/a-conversation-with-senator-judd-gregg

^worth watching. he's got Warren Buffett in prime time tonight.

http://www.charlierose.com/shows/2008/9/30/3/a-discussion-about-the-economy-with-mort-zuckerman-andrew-ross-sorkin

^actually, this is the more interesting part of the show

what if we took that first $250 billion and simply divided it up amongst taxpayers?

Vegas would love that plan.

what if we took that first $1m and gave it to me :)

lol at zoom-in on *damning* WIKIPEDIA ARTICLE

http://www.techcrunch.com/wp-content/uploads/2008/09/septembermadnessb.jpg

lololol

I love how the only two things anyone can seem to think to do with taxpayers' money is: bail out Wall Street, or write personal checks. Oh or go to war. And by love I mean hate.

Senate passes revised bailout 74-25. McCain and Obama both voted for it, so there ya go.

Yes. It would be nice if taxpayer money would be used for you know ... good stuff, that helps us. While it's easy to argue the free flow of credit is essential to the economy, it's not easy to argue why we have to subsidize the idiocihogiheoih oh man, there's just no point. We'll never win.

I mean man, Barney Fruitcake Frank and all those guys, they're in on the scam, too. It goes ... all the way to the top! You know it went all the way somewhere, but the top's a little surprising.

New Tax earmarks in Bailout bill
- Film and Television Productions (Sec. 502)
- 6 page package of earmarks for litigants in the 1989 Exxon Valdez incident, Alaska (Sec. 504)

And you thought the money was just going to Wall Street!

they tacked on 100bn of stuff according to BBC. They had em over a pork barrel alright.

I was under the impression that actually the bailout stuff got tacked on to an existing unrelated bill rather than vice versa. But I could be mistaken.

er actually nevermind I think the story I read wasn't pertaining to those earmarks

“The bailout legislation that the Senate is sending back to the House is a fraternal twin to the one I voted against on Monday — meet the new bill, same as the old bill,” said Representative Joe Barton, Republican of Texas.

http://www.nytimes.com/2008/10/02/business/02bailout.html?partner=rssnyt&emc=rss

Only a third of the Senate's members are up for re-election on November 4, compared with all representatives in the house, so there may be fewer qualms about voting for the measure, which is unpopular among voters.

http://www.theaustralian.news.com.au/story/0,25197,24432015-2703,00.html

Is there a Bob Barr thread? I don't see one...

Not specifically, I think.

NY Times story about all the power players going nutzoid on Sep. 17-18