The Bailout: $700 Billion of MY money?

[owequitit]

I thought I'd throw this out there:

"Any company that is too big to fail, should not exist"; thus is a perfect economy where there is an infinite number of companies serving an infinite number of consumers.



Bernie Sander really says it straight...I actually understand what he is talking about. Very good talk.

To a point that is true, however, that doesn't stop the fallout when they do fail.

Also, in pure Smithian economics, the strong (large in most cases) survive and the other do not.

The opposite of that would be government mandated control, which in order to work has to remove competitive pressures (i.e. airline regulation). That is not good for the consumer either.

There is the black: Zero regulation

The white: Total regulation

And then the best solution which lies in the grayscale in between. The problem you run into, and another disadvantage to the current state of partisan politics, is that one side wants to regulate too much, and the other side doesn't want to regulate enough.

The best solution is free market with government oversight. The problem lies in where to draw that distinction.

Our economy has proven time and again that free market provides the most benefit for the most people. It provides refuge for new ideas and capital, it provides the best service for the dollar etc. It is why our economy is as large as it is. However, it does occasionally falter.

Personally, we could go a long way to alleviating a lot of this crap if the US Justice Department would NOT approve some of these shaky mergers between companies that get themselves too big. It isn't like large companies can just put themselves together unabated.

Also, if you do allow them to fail, how do you explain that to the people who lost their jobs, invested in them, and held an interest in their success, when there was another avenue that could have saved them? It might be a short term issue, as eventually a better suited company would move in and fill the void, but until then, you have political pressure that politicians don't want to deal with. Democrat or Republican.

Not to mention the fact that the oversight of the government (not all of which is run by Bushy) did nothing. The Democrats have had a majority control for almost 2 years now, and promised all kinds of wide sweeping changes (as they usually do) at the last election. And here we are. Two problems. 1) They didn't gain enough of a majority control to overpower the right (don't make promises you can't keep), and 2) I am no genious, and I saw this problem coming as soon as these mortgages hit the market. If I am that stupid, and government oversight or "regulation" is REALLY the key, then why didn't they act proactively and do something about it 7 years ago?

Because government oversight is usually as much of a crock of shit as the lack of it. Their oversight didn't eliminate our vulnerability to 9/11, it didn't protect us from Katrina, it still hasn't fixed the security holes in the system, it hasn't provided competitive structuring from utility companies, among other things. Replacing one imperfect system with another isn't better just because it is different. The government actually has crisis far more often than the private sector does, so you aren't going to get me to buy that arguement. The problem with government oversight is that government entities don't react to problems until they have either exploded, or it is too late. Long term, I don't give a shit what you think. If you think that is better, you are dumb.

The BEST solution is to use the strengths of the two to compliment each other, but suggesting that may as well be heresy. Wide sweeping regulation in and of itself is stupid. You have to strategically target regulation, and it probably would have to be custom fitted to each industry. Of course, then you also have the conflicting interests of the government. Oversight, and protection, which are often mutually exclusive. A good example: the FAA. Their job is to make sure that airlines and airplane operators are doing everything in the maximum interest of the law. But they are also there to make sure that they don't ask too much, so that the airlines can compete adequately. A conflict? Youbetcha. The other problem? The laws are often written to the lowest common denominator.

[owequitit]

Here is another interesting read:

http://news.yahoo.com/s/time/without...twillthecostbe

Sometimes, to save face and money on the front end, you end up paying more on the back end.

We have already absorbed $270 billion as taxpayers, per the Citi/Wachovia deal.

[Gtseviper]

well my fellow americans "I became a citizen in 2001 or so" please bend over for a royal whoohaaa raping because our loving government that some of these lovely americans voted for doesn't give a shit about the insignificant...please relax and enjoy the ride

and I came to this country to get a better way of life and education I thank you for all that you have granted me...but now it has become pointless because I could lose my job any day

[Fake Thug]

So the guy at GM, or any number of other companies that loses his job, and also consequently loses his house because he can no longer make the mortgage would not have benefitted in anyway, shape or form from this?

Are you sure that is your final answer?

Well I did say that some people will suffer. If the market were allowed to work like it should that pos company would have failed a long time ago. I dont feel like getting started on them. Even with this bailout deal sustaining companies like that is only going to prolong the inevitable. The root cause has not been checked.

Bailing out stupid businesses is a really poor policy. Business employs a darwinism type deal to make sure that the smartest, most agile companies survive. The upside to the bailout going through is that gorverment spending will most likely be holted for a while. For sure no UHC or any new kind of wealth redistribution programs, b.s spending. So I'm not exactly sure where I stand as of right now..

[verothacamaro]

Can't answer the question, or don't want to?

I am well aware of the 14CFR thank you very much. I use them daily at work.

But you are finger pointing and not providing many answers, so I will ask the question once again.

"Since we are all so far beneath you, why don't you start providing some examples where long term regulation has helped the consumer?"

Did you bother to open that up?

Food and Drug Administration...........?

is that good enough example for you?

[texasvtak]

well my fellow americans "I became a citizen in 2001 or so" please bend over for a royal whoohaaa raping because our loving government that some of these lovely americans voted for doesn't give a shit about the insignificant...please relax and enjoy the ride

and I came to this country to get a better way of life and education I thank you for all that you have granted me...but now it has become pointless because I could lose my job any day

Back home lookin any better?

[lokuputha]

I hope its okay I post these videos:

[SteveB]

"Privatize gains, and socialize losses"

ZING!!

[owequitit]

Did you bother to open that up?

Food and Drug Administration...........?

is that good enough example for you?

Yeah, I did open it up. And for every one example of hard regulation to the benefit of the consumer, I can point to 2 or 3 that didn't work out so well.

[owequitit]

Well I did say that some people will suffer. If the market were allowed to work like it should that pos company would have failed a long time ago. I dont feel like getting started on them. Even with this bailout deal sustaining companies like that is only going to prolong the inevitable. The root cause has not been checked.

Bailing out stupid businesses is a really poor policy. Business employs a darwinism type deal to make sure that the smartest, most agile companies survive. The upside to the bailout going through is that gorverment spending will most likely be holted for a while. For sure no UHC or any new kind of wealth redistribution programs, b.s spending. So I'm not exactly sure where I stand as of right now..

It can be a poor policy yes. However, as I said before, we are going to eat it one way or another. It is just a matter of how much and how long it takes to swallow it.

One of the fundamental flaws of 99% of the arguments in this thread is this. They have postulated and formulated an Us vs Them mentality, when in reality that couldn't be any further from the truth.

1) We are "them." People like to point to CEO's of companies as the sole beneficiary of any gains or fallouts. Much like many ignoramus's point to the President as the sole operator of the government. The problem with this philosophy is that corporations are just that. A company owned by a "corporation" of shareholders. That means that the CEO isn't the only one involved, liable or responsible. Each company that fails or succeeds takes with it each and every shareholder. Your mom and dad, for instance. You, if you have some kind of retirement investment. Your neighbor, whoever. When companies like this fail, it isn't one lonely spoiled dude sitting in a corporate penthouse crying himself to sleep. It is thousands if not MILLIONS of people who all lose some of their money.

Yes, some blame needs to be placed. I have not said that it doesn't. However, letting otherwise healthy companies fail because a of a small amount of liability is silly. It might work if it were 1 company. But it isn't. It is an entire industry. People seem to have this mentality that big business' money just grows on trees, when they know damn well that NO money grows on trees. Each and every bank has daily, weekly, and monthly obligations that must be met, just the same as you or I. When they get to the point where they can't meet those obligations (insolvency), they fail. If you have revenue due that isn't coming in because the person who was supposed to pay you failed to do so, then you reach the point of insolvency. Verothecamaro should understand that one. If your customers don't pay, you fail, perhaps through no direct fault of your own, or perhaps a combination of fault. The interest due on your savings? That is an obligation. The money due to the Feds that they used to loan you? That is an obligation. The electric bill? That is an obligation. How would you like it if they just stopped paying you the interest that was owed to you?

Point blank: If the banking industry fails, life as you know it is gone. I am not talking a small shift, I am talking total failure. That is how important the financial security is. Believe me or don't. If you watch them fail, you will see what I am talking about. Read the history books in case you have forgotten. Life doesn't get all rosy and peachy when banks start failing. Not to mention the fact that the "suffering" is far more deep rooted than just the CEO's of the company. You are talking a total of hundreds of millions of people.

They are us, we are them. If they fail, we fail. Period.

2) As referenced in the article above, it is going to cost us more than $700 billion if we do it the way some in this thread say we should. The Wachovia deal alone cost the taxpayers $270 billion dollars. That is nearly half of the potential total of the bailout on 1 single deal. Why? Because when Wachovia gets into a failure position due to a small % of its total obligations, you then have to deal with ALL of the obligations. Wachovia had $312 billion in obligations, not all of which was bad. But since they are insolvent, you now have to resolve all of the obligations. Who does that? The FDIC, and the Federal Reserve. There is no way you can talk a sane and healthy company into taking on that kind of debt, and you certainly can't force them. The FDIC had to eat $270 Billion in obligations just so that Citi would agree to take over Wachovia in order to prevent it from being insolvent and failing. Citi STILL absorbed $30 billion in obligations that they really didn't have to.

Why is that important, and how does it tie in?

If the bailout passed, it identified specific debts and amounts that needed to be dealt with. The total required to save Wachovia from becoming insolvent may have been on the order of $20-30 Billion, which while a lot of money, is certainly far less than $270 billion. Then, the Feds hang onto the bad debt until the market recovers, they sell the assests for a marginal to nominal profit, and the deal is over. The books are clean, they end up with money in the pocket, and the consumer is able to carry on during the whole thing. This way, there is an EXTREMEMLY high chance that the market recovers, allowing them to do so. The long term trend is up. Who knows, that might have also helped programs for low income families like HUD. Since the purpose of the government isn't to generate profit, they could easily have sold those houses for a minimal profit on what they paid for them. If timed strategically, MANY people could have benefitted that otherwise would not have.

However, now they have to try and recoup $270 billion instead of $20-30 billion with the same assets they would have had otherwise. That is 10x the debt load, which means they will now probably never recover all of it.

It is one thing to promote stupidity that shouldn't be there, but it is also stupid to perpetuate greater stupidity while trying to save yourself from lesser stupidity. The bailout was the lesser of two evils, which is why you will probably see one in the very near future.

And we haven't even gotten into the fallout that rippled into the industries that aren't even tied to the housing crisis...

[owequitit]

http://news.yahoo.com/s/ap/lt_meltdown_pointing_fingers

[owequitit]

I found these interesting as well:

http://news.yahoo.com/s/ap/20081001/...3w3adXNemyBhIF

http://news.yahoo.com/s/nm/20081001/...bcYLRYy52yBhIF

[baracuda]

now this a good read.
http://www.infowars.com/?p=5037

[fatboy1185]

cock balls, ima get rich or die trying

[baracuda]

if your looking for a long read or to pick apart them details of this so called bill, here it is in its entirety,
http://freespeech.vo.llnwd.net/o25/p...bankerbill.pdf