"no one, and I mean no one, really has a clue what will happen, bailout or not"

[cali]

that's what my ex said when I went to visit him on Sunday to talk about the financial crisis/mess/whatever. I wanted his take on it because of his background and what he's done for 25+ years. He's got a MA in Economics, a MA in Accounting and he's chased down crooked corporations for the last 25 years for the state. He unravels elaborate tax avoidance schemes. He's taken on some very big corporations and he's won more often than not. So he gave me his take on things with the above caveat that he doesn't think anyone really knows.

His take is that any bailout will have a tough time succeeding without the underpinnings of corporate regulation and accountability being radically changed. That takes time. He also thinks that no bailout could lead to a real economic meltdown.

Essentially he said he thinks it's between a fast meltdown and a slightly slower meltdown.

Caution: This is a guy who's been preparing for a social collapse since I've known him. His house is practically self-sufficient. He can build anything, fix anything and survive said social collapse. So despite his knowledge about economics and the financial world, he's got that secular end-time thing going on.

[PVnRT]

1. Which is why we need to slow it down

Slow it down enough so that there is time to redo regulations and create something resembling a stable marketplace instead of Mad Max World.

[maui9002]

3. Disagree, something needs to be done now

to solve the credit crisis; much more can be done in 2009 with a Democratic President and a Democratic Congress. I'm a supporter of yesterday's plan, but admit (as indicated in the OP) that nobody really knows if it work. But I'm certain it's worth the risk given the trouble I see looming ahead.

[cali]

5. I don't think bad, rushed legislation is ever the answer.

[RaleighNCDUer]

6. When you don't know what to do, but have to do it NOW

that's called "panic".

You say "nobody really knows if it will work". You want to give away 700 billion dollars to the richest 5% with no idea how it will be used, who will benefit, or if it will be effective? And if it isn't effective, and you've given away 700 billion dollars, where do you get the money to fix it on the 2nd try?

[maui9002]

10. Nope, I don't want to give away anything

I want my government to step in now to stop what I believe is a pending economic disaster. And I want them to do so by spending money to buy assets at a discounted value (that is not giving away money) and I'm not sure where you get the to "give away" to "the richest 5%"; it's going to financial institutions so they can survive; if they don't, far more people who are ordinary folks will lose their jobs than the so called "fat cats". In addition, the bill provides for substantial oversight of how the money is used, and calls for a report on overhauling the regulatory system. I get the impression that most people who believe we need to do this slowly and carefully don't think much bad will happen that could have been averted by a bailout bill while Congress is carefully considering what to do. And maybe they have a clearer crystal ball than I do, but I see a very grave risk that we will suffer greatly if the credit crisis is not addressed very quickly.

[PVnRT]

7. Ummm....we don't disagree

That was my point.

[lumberjack_jeff]

9. I'm fine with "right now". I'm not so fine with "enormously, arbitrarily huge". n/t

[Bolo Boffin]

2. Yep!

It's true.

People in Congress are reacting because they feel like they have to do something, SOMETHING.

But what? Perhaps the Hippocratic Oath would be in order here: First, Do No Harm.

[stuntcat]

4. the secular end-time thing

That's what I've been living every day for the last few years. Lowering my expectations has made the news seem less alarming and stuff :)

I can't understand much about the stock market, I admit that, but it looks like whether or not this particular bill was passed we'd end up with a big mess anyway.

We have to keep his quote in mind when we see people screaming at each other over this.

[Barack_America]

8. The bailout isn't about fixing it. It's about buying time.

Until January when the Democrats get the White House and absolute majorities in both the House and Senate. Then they can hammer home all the regulation they want.

[Kurt_and_Hunter]

11. Your EX is probably right, but it that uncertainty doesn't mean what folks think it does

1) The effect of the bail-out is unknowable

2) The potential upside of the bail-out is almost infinitely higher than the potential down-side


Properly considered it is one of the easiest public policy questions I've ever seen but many folks don't seem comfortable dealing with an array of probabilities. They want to stake out unknowable "certainties" and extrapolate from bullshit out to infinity. It is the intellectual version of precisely the sort of 'over-leveraging' that got us here in the first place.


The only scenario in which the government loses 700 Billion is a scenario where that 700 Billion would be the last thing on anyone's mind.

The 700 Billion would be created out of thin air, just like all our other money. The downside of that is inflation, but inflation is the dumbest possible concern if one is worried about a deflationary spiral and relative devaluation of real estate versus existing mortgages.

(Inflation is a bad thing, but it would put all fixed-rate mortgages in the black. If anyone was worried about non-comodity inflation right now we wouldn't be pouring trillions in liquidity into the world money markets.)

The bail-out is as close to a free-roll as we are likely to get.

[Kurt_and_Hunter]

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