Bush asks Congress for $700 billion for bailout

newok ^ | 09/20/08

[TigerLikesRooster]

Bush asks Congress for $700 billion for bailout

WASHINGTON - The Bush administration is asking Congress to let the government buy $700 billion in bad mortgages as part of the largest financial bailout since the Great Depression.

[wk4bush2004]

That is a HUGE amount of money! I’ve never heard Bush ask for that much money all at once before....

[Yardstick]

Sure hope these people know what they’re doing.

[Lonely Are The Brave]

“If the American people ever allow private banks to control the issue of their currency, the banks and the corporations that will grow around them will deprive the people of all their property, first by inflation and then by deflation, until their children wake up homeless on the continent their fathers conquered.”

Thomas Jefferson

[TigerLikesRooster]

Ping!

[Camerican]

You’re right. Normally he wastes this amount at least over 4 to 6 months.

What a joke.

[A_perfect_lady]

Wow, Democrats are going to be torn. On one hand, they love government intervention. On the other hand, they hate Bush.

Oh, who am I kidding. They'll pass it. Gleefully.

[what's up]

It's the only answer unless you want a deep recession.

I've noticed some on FR would rather have that.

When McCain gets in we'll see if he can cut spending like he's been wanting to do for years. If he can do that significantly, that alone could take a huge bite out of this debt.

Oh, and cutting corporate taxes like he's been talking about won't hurt either.

[IM2MAD]

$700 billion for bailout

Take it out of the congressional retirement fund.

[vietvet67]

This is just a down payment on the actual amount that will be hoisted onto our backs..

[Always Right]

Banks are currently calling on notes from businesses who have not missed a payment and are under no threat to default. Banks are scared. Many have completely stopped loaning and they are creating a huge credit crunch. Our debt based currency and economy requires banks to loan money. When banks stop loaning money, the economy collapses.

[KansasGirl]

$700 billion? That’s not even as much money as Obama is wanting to send to the U.N. as part of his Global Poverty Act, in his effort to wipeout global poverty by 2015.

This is the perfect time for McCain to do an ad about this.

[Oldexpat]

And how,,pray tell..will they set a value on the mortgages?
Ten cents of the dollar?
Will the price be set at what is required to keep the bank in business?..Or will it be set to kill off 50% of the bank equity?
Without some market mechanism, how will they set the price?

[Joe Brower]

"Sure hope these people know what they’re doing."

That's the part of this big problem that no one wants to mention: They don't. If they did, chances are we would not be in this mess to start with. Unless damaging the U.S. was their goal. Many aspects of these events closely follow the Hegelian Dialectic.

With the enormous public debt already on the FedGov's books, where this money will come from is going to hurt us more in many ways, some of them impossible to predict. And that's only part of the troubles ahead.

[verity]

Your analysis is a breath of fresh air in the midst of too many ill-considered comments.

[Boiling Pots]

Gee, the trillion or so spent in Iraq looks real smart now!

[Dick Bachert]

Sorry, but there no longer IS “money” here. Just IOUs to be repaid by our kids and grandkids.

“If you don’t trust Silver & Gold, do you trust the logic of taking a pine tree, worth $4,000 - $5,000, cutting it up ..... turning it into pulp, putting some ink on it and then calling it one billion dollars?” - Kenneth J. Gerbino

[Dick Bachert]

“If you don’t trust Silver & Gold, do you trust the logic of taking a pine tree, worth $4,000 - $5,000, cutting it up ..... turning it into pulp, putting some ink on it and then calling it one billion dollars?” - Kenneth J. Gerbino

[Lonely Are The Brave]

“I've noticed some on FR would rather have that.”

I don't know what economics you have studied but there are things called business cycles and failures.

How can Republicans, in the future, stand in front of us and spout free markets and trade with a straight face?

Individuals should have a year of rainy day money and be prepared to maybe work at a job for a short period of time even if they are over qualified for the position.

You survive and hope for a better day. Been there done that and would again if necessary.

This bailout is a total capitulation to socialism to the fullest.

Yep, let the market clear out the thiefs and excesses in the system.

[traviskicks]

Privatize gains, socialize losses. The statist republicans continue to destory the country.

[wk4bush2004]

“Sorry, but there no longer IS “money” here. Just IOUs to be repaid by our kids and grandkids.”

Yeah, good point.

[atomicweeder]

Wouldn't a deep recession simply be a natural consequence that has to play out?

I would let it all collapse and then rebuild. (And I am NOT set for life -- I could lose my job, savings, etc.)

[Yardstick]

It's the only answer unless you want a deep recession. I've noticed some on FR would rather have that.

I'm torn over it. Obviously you don't want a deep recession, but on the other hand it's a bad pattern to have the govt saving the markets. It's setting up the "moral hazard" that economists warn about. Business will take greater risks when it knows govt with bail them out. Privatizing profits, socializing losses, etc. This just feels like it could be a short term fix to a much deeper problem that isn't being addressed and that in fact might be made worse. And even if it works, we lose. It makes the Keynesian types and the big-govt left look smart. People like Chris Dodd are going to wind up looking like heros. I'm a rank amateur when it comes to the technical workings of the markets, but as a matter of principle (a la Hayek and Mises and the rest) this does not seem like a good thing. Nor does it seem like the least bad thing necessarily. On the other hand, we live in a real world and there are exceptions to ideology. I don't know. Tricky stuff.

[Snurple]

Bush asks Congress for $700 billion for bailout

Reminds me of this scene from the Matrix....lol

Morpheus: I imagine that right now you're feeling a bit like Alice. Tumbling down the rabbit hole?

Neo: You could say that.

Morpheus: I can see it in your eyes. You have the look of a man who accepts what he sees because he's expecting to wake up. Ironically, this is not far from the truth. Do you believe in fate, Neo?

Neo: No.

Morpheus: Why not?

Neo: 'Cause I don't like the idea that I'm not in control of my life.

Morpheus: I know exactly what you mean. Let me tell you why you're here. You're here because you know something. What you know, you can't explain. But you feel it. You felt it your entire life. That there's something wrong with the world. You don't know what it is, but it's there. Like a splinter in your mind -- driving you mad. It is this feeling that has brought you to me. Do you know what I'm talking about?

Neo: The Matrix?

Morpheus: Do you want to know what it is?

(Neo nods his head.)

Morpheus: The Matrix is everywhere, it is all around us. Even now, in this very room. You can see it when you look out your window, or when you turn on your television. You can feel it when you go to work, or when go to church or when you pay your taxes. It is the world that has been pulled over your eyes to blind you from the truth.

Neo: What truth?

Morpheus: That you are a slave, Neo. Like everyone else, you were born into bondage, born inside a prison that you cannot smell, taste, or touch. A prison for your mind. (long pause, sighs) Unfortunately, no one can be told what the Matrix is. You have to see it for yourself. This is your last chance. After this, there is no turning back. (In his left hand, Morpheus shows a blue pill.) Morpheus: You take the blue pill and the story ends. You wake in your bed and believe whatever you want to believe. (a red pill is shown in his other hand) You take the red pill and you stay in Wonderland and I show you how deep the rabbit-hole goes. (Long pause; Neo begins to reach for the red pill) Remember -- all I am offering is the truth, nothing more.

(Neo takes the red pill and swallows it with a glass of water)

[what's up]

I would let it all collapse and then rebuild.

That's what Pol Pot said.

[rabscuttle385]

FYI Bloomberg is reporting $800 Billion, and knowing how our Government usually works, by the time this is all over, the figure will be probably in the trillions.

[yooling]

I'm confused by all of the figures that are being thrown about. The $700 billion is the amount of mortgages in default? Or is it the total of the outstanding mortgages?

If it is the latter, then while the risk is still there; 95% of mortgages are not in foreclosure. If it is the former, then we the people now own a $hit-load of real estate and we should be trying to sell it and recoup some of the money.

Either way that figure should go down. Correct?

[Technocrat]

As I recall, the RTC actually ended up losing very little money, or made some in the end (see http://en.wikipedia.org/wiki/Resolution_Trust_Corporation) If these portfolios are managed correctly, it wouldn’t surprise me to see the taxpayer make some money on this. There is also the potential for grand theft on an empire scale, but if there were ever two people who could stand in the way of that, McCain and Palin are those people. I don’t think this is the disaster people are making it out to be, especially if the govt can get these notes for ten cents or even thirty cents on the dollar.

[vietvet67]

Good questions for which I have no answers.

I suspect the govt will be overly generous on values to prevent triggering the derivative time bomb.

[TomGuy]

IIRC, it was Dagen McDowell on Fox&Friends this morning who was defending the Wallstreeters by saying they were hurting too, because their stock holdings are losing money.

Awwwww.

[what's up]

Thanks.

I've noticed a lot of "hate the rich" rhetoric flying thick and fast around here lately as people see this plan as some kind of corporate bailout.

Far from it. It's necessary to protect the weakest of the weak among us.

Challenges are ahead for McCain. But I think he just may be able to complete the task.

[Camerican]

Get real. McCain’s proposed spending cuts won’t even amount to a drop in the bucket that is our national debt.

[668 - Neighbor of the Beast]

Got debt? Max it out and file bankruptcy. Tell the gubmint to forgive you too.

[Lonely Are The Brave]

“The government solution to a problem is usually as bad as the problem.”

Milton Friedman

[Jacquerie]

When banks stop loaning money, the economy collapses.

Yes. We were at the edge of the abyss before the FED and Treasury stepped in. Banks had stopped short term loans to each other, several money market mutual funds were experiencing runs, the list goes on.

Had the government not intervened, a deflationary collapse was only a couple days away.

I suspect a calamity is only postponed. Congress will do what is politically expedient rather than fix the long term problem.

[Beelzebubba]

“If you don’t trust Silver & Gold, do you trust the logic of taking a pine tree, worth $4,000 - $5,000, cutting it up ..... turning it into pulp, putting some ink on it and then calling it one billion dollars?” - Kenneth J. Gerbino

---

Good quote, except that money’s made out of mostly cotton (25% linen), not wood pulp.

[what's up]

As I recall, the RTC actually ended up losing very little money, or made some in the end.

Yes. Similar to what may happen with the AIG "bailout". The final result may very well be that the taxpayer comes out ahead.

[Mr. Jeeves]

It's the only answer unless you want a deep recession.

It only postpones the deep recession/depression until after the elections - which both parties want because the Democrats aren't sure they'll be able to capitalize on it.

[TomGuy]

Cavuto on FoxNews: "We are getting word that it is a $700 billion minimum."

[Watch out for the fine print.]

[what's up]

McCain’s proposed spending cuts won’t even amount to a drop in the bucket that is our national debt

McCain's (and Palin's) general vision of reform in general which includes social security/Medicare/health reform along with a healthy dose of tax cuts?

Lots of hope there. Like I said, this may be the catalyst to shake people up and make them listen to some of these reform proposals.

[Beelzebubba]

Naive question:

If a family got in over their head, and can’t make their house payment, what do we do? The bank forecloses. (The family gets a bad credit rating, which they probably already had, and finds a house to rent. It turns out there are plenty, including the one they just lost.)

If the bank has lots of foreclosures in a down market, what happens? The shareholders lose their money.

If the bank can’t pay back depositors because they lent out most of the deposits on bad debts, customers with deposits in excess of $100,000 lose their money. Everyone gets their money back up that amount from FDIC insurance.

So, if this $700 billion in FDIC payouts? No? So who is getting the money (my money)?

[TigerLikesRooster]

It won’t surprise me if it goes up to $1 trillion before the end of this year. We are indeed in a big trouble, since derivatives started to go off. Some folks are even saying that there are other things bigger than derivatives. Anyway we are in a big trouble.

[atomicweeder]

When you bail out institutions that did wrong things, you are REWARDING bad behavior.

[P.O.E.]

How much salary are the company execs returning as part of their malfeasance?

[Moonman62]

So, if this $700 billion in FDIC payouts? No? So who is getting the money (my money)?

The institutions that own the mortgage backed assets, but they'll be selling them at a deep discount.

[TigerLikesRooster]

A fraction of it may contain FDIC payment. The rest is to plug big holes in the balance sheet of major financial institutions. These holes are not created by a short fall in the payment to depositors.

They are trying to prevent big financial pyramid from collapsing, which could cause depression.

[wolf24]

So who’s going to bail out the US government when it goes belly-up?

[dfwgator]

So who’s going to bail out the US government when it goes belly-up?

"...and I for one welcome our new Chinese overlords."

[vietvet67]

As Obama would say, you’re asking questions above my pay grade. :-)

I believe the $700 billion is for bad mortgages only with a new govt agency formed to dispose of the mess.

If we go into recession or are already in one then I assume the number of bad mortgages will increase with the govt continuing to pick these up to save the financial institutions.

[Las Vegas Ron]

Hegelian Dialectic

Absolutely. HMO's, no drilling to drive up oil prices, force sub prime loans, all so the "Gummit" can come to the rescue and save the people from the failures of evil capitalism.

So many other examples, so little time.