Dumb question time - what is the alternative to bailing out these financial firms?

[proud2BlibKansan]

I just got the umpteenth email from a progressive group telling me to contact my reps and tell them NO on the bailout.

So what's the alternative? What happens if we don't bail out Wall Street? Is there a better strategy?

edit: typo

[Hugin]

1. The alternative is that we lose a few oligarchs and large McCain/Republican political donors.

Compared with what we've been through... Not much.

[eShirl]

2. chaos, Bush delares Martial Law / national emergency

McCain wins election unanimously

[lame54]

7. There won't be an election - bush stays in office...

That can happen bail-out or not

[Wiley50]

20. Yep NSD 51 This is what made Schumer's jaw drop

That is the devil's bargain the Bushies made.

Bailout or Martial Law

We get the bailout either way

Our Dictatorship comes out of the closet

Barack better make a national address and say the right things

If he doesn't rally us to revolution a lot of us will stay home in Nov anyway

[cliffordu]

24. "If he doesn't rally us to revolution a lot of us will stay home in Nov anyway"

If that's true, why are you here??

The effort to participate - which you obviously exercise, would seem wasted.

[meow2u3]

33. Do you have a link?

I'd like to read the text.

[asthmaticeog]

3. The problem isn't the bailout per se.

The problem is that the bailout as it's currently written comes with no regulatory or oversight strings on the failed firms.

[Telly Savalas]

29. Precisely. The root of the problem is poor risk management.

If the government gives handouts to these institutions without any strings attached, it only encourages the continuations of these flawed risk management practices which pretty much guarantees that they'll come back begging for more handouts at some later point.

They're already shown that they'll fuck up using their own money. Why should we think they'll do any better with our money?

[calmblueocean]

4. Bail out the homeowners instead.

Instead of buying junk paper from Wall St., set up a program to guarantee that people who are in or about to be in foreclosure will be able to pay their mortgage. That would shore up the mortgage-backed securities that are at the root of all this, and would at least benefit the American people, and not just the crooks on Wall St.

[PSPS]

14. Why reward liars?

Why should my tax money be used to buy the McMansions that people got into with their "liar's loans?" These need to be foreclosed, and these people should be renting.

[Hugin]

15. And instead reward the Banks for not doing Due Diligence.

Weak argument.

[fascisthunter]

16. Because most are not McMansions and You already know that

most are middle class homeowners

[proud2BlibKansan]

17. Do you honestly believe all of these foreclosed homeowners

live in McMansions?

I know better.

[fascisthunter]

18. no... but that argument helps to stifle any bailout of us average Americans

doesn't it?

[proud2BlibKansan]

19. Sorry I don't follow

:shrug:

[fascisthunter]

21. The Argument that Some Own McMansions...

in itself is only a small truth, whereas most homeowners are not buying mcMansions, but instead are ordinary blue collar workers who once belonged to a now dwindling middlecalss. It's the same argument you will hear some use against welfare.... That welfare is no good because it rewards and promotes laziness....when in fact, some abuse it, most depend on it, to get themselves on their feet again.

A less than half truth is being used here to argue against aiding homeowners... not your argument but the argument presented by the other poster you responded to.

[slackmaster]

27. I don't know how many McMansion owners, flippers, etc. are facing foreclosure

Do you have a source of verifiable information on this?

[slackmaster]

26. Not all of the homeowners deserve to be bailed out, and some deserve more help than others

If the plan included a set of objective criteria to determine who gets bailed out and to what extent, I'd love to see the plan.

[ThomWV]

5. You will not be able to cash checks from banks other than your own.

That's basically it and what it means is that commerce in this nation comes to an immediate hault.

[sandnsea]

12. In the world

If banks around the world don't trust our banks, then the international banking system grinds to a halt too. Do you know where that thread is that explained all this? I can't remember who posted it, but clearly more people need to read it. The one about libor, etc.

[HamdenRice]

28. That was me. Here it is-->

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4027506

[sandnsea]

30. Thank you

I kicked it back up. Your post is what gave me a very clear understanding of what is going on. Then I read a few other things, including a post about a bank in Germany being furious they had sent money to Lehman, and it validated everything you said. I don't think people understand what we're facing. They think somebody might not be able to get a loan, boo hoo. But that isn't the problem at all, not in the short term anyway.

[blm]

6. Open the focking books on all of it and let the American citizen have INFORMATION they need

to make the best decisions possible.

They already fucked us over when they used the S&L bailout and the closing of the books on BCCI, making lawmakers fearful of what would happen if the American people knew the TRUTH and could see the fascist agenda for themselves. How did it work out for our country, this nation and hell....our party the last two decades?

Thank Bush-Clinton-Bush for the continuing coverups. Having control of most broadcast and print media certainly helps maintain the STONE WALL.

They really have no RESPECT for the rights of American citizens to open and accountable government OR open and accountable financial systems. They have every right to OUR information, but made sure we cannot access information that IS OUR RIGHT and OUR DUTY to examine as citizens.

[FirstLight]

8. Possibly it could end up looking a lot like 1929???

or later, more like when it REALLY hits the masses...like bread lines, etc?

I am curious, so if we didn't do anything, would it affect us here on the ground? if it affects our ability to get food and stuff from everywhere else, then we are screwed until we learn how to make our own stuff again. We are going to have to Re-tool this country - it just depends on whether we get forced through total anarchy and breakdown...or if our new president can make it happen in an orderly fashion. I hope with all my heart he can help us transition this gently. It is a BIG transition, we are going to be changing the way we do business and even basic lifestyles over the next 5-10 years.

[undeterred]

9. Let them sink and suffer the consequences.

[RazBerryBeret]

10. Our economy would be in worse shape...

and from what I understand it would have a large negative effect on many foreign countries...and I guess if our banks fail and it impacts the Chinese enough that they'd call in our debts to them, it would be very bad...

That said, I seriously think there should be some sort of punishment for the people that caused this. This was not a little accident, many people KNEW this would be the outcome but were only concerned about their profits.

[Indi Guy]

11. I share your pain...

Please checkout (re: The Dogs of War and Poverty) -- http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4048631

[HamdenRice]

13. Like ThomWV said -- with days or weeks, you won't be able to cash your paycheck

As explained here:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4027506

This is more like a 19th century panic than 1929, because it is about the very stuff that banks think of as money not being accepted by other banks.

[johnaries]

22. Global Economic Collapse.

1929 will look like boom times. The Global markets are much more interconnected now than they were then, and much riskier.

Hate to sound "doom and gloom", but that's the truth.

[BraneMatter]

31. Good...

let it crash and burn. Let people everywhere see capitalism for what it is and opt for revolution.

Otherwise, the robbery, exploitation, and oppression will just continue.

[Odin2005]

34. What a sick, disgusting attitude.

The ends do not justify the means. That attitude reminds me of the fundies that want to f*ck up the world to make Jesus come sooner.

[Douglas Carpenter]

37. there is no more guarantee that socialism will replace the current capitalist model than that an

extreme right-wing order, perhaps even something resembling fascism, could just as likely replace it. Especially if the worse results of the collapse occurs with a Democrat in the White House and the Democrats controlling both houses of Congress.

After decades of right-wing indoctrination, much of the public are just as likely to blame, the "liberal elites", the pointed headed intellectuals, the immigrants, the Arabs, and other "undesirables" as they are to see it in the context of the class struggle.

It is always just as bad an idea to hope for bad times as it is to wish for war. It will be ordinary working people and the world's least fortunate who will suffer most from such a collapse, just as it is ordinary working people and the world's least fortunate who suffer most from war.

Eugene Debs once said, "I am for socialism because I am for humanity." Anyone who would rejoice at seeing hundred of millions of people worldwide condemned to a life of total economic destitution and poverty is definitely not for humanity is certainly not much of a socialist.

[MadHound]

23. Rejecting the bailout is the least painful of the alternatives

It would mean that world credit markets would go to hell, cash would be tight, there would be a major economic downturn. However the bailout is a worse alternative. Sure, it would provide liquidity in the market, for the short term. However in a few months US treasury bonds will be downgraded, the nations holding those bonds already will start selling them in droves, and/or the government will start printing money like crazy, leading to hyperinflation. This will lead to a complete collapse of our economy and our government.

The reason that Bush and Paulson are pushing for this bailout isn't to save the economy, it is to skate out of office and leave the next president stuck with the mess they made, and to give one final payout to their corporate masters. They don't care that this move will destroy the economy and government. They've got theirs and figure that their wealth will protect them.

[BlooInBloo]

25. Bailout is fine (as fine as it gets) - but it comes with conditions...

(1) Execs lose their monies.

(2) Strong regulation is put in place

(3) A fully transparent light is to be shined on all of their dealings

(4) ALL powers given to the executive branch are subject to FULL oversight by BOTH the legislative and judiciary branches.


That's a decent start.

[WePurrsevere]

38. This is the way I'm leaning out of concern for the "trick

this will have on jobs, costs, etc for the middle, lower income and poor.

The idea of "no action" doesn't make sense to me, it seems to me that there's to much risk. OTOH I don't think we should be throwing good money after bad without some conditions similar to what you posted either.

Although we do need to act soon I don't think we shouldn't rush into this haphazardly and I certainly don't trust Bush, McCain or any Republicans with a carte blanche account.

[meow2u3]

32. Prosecute the gangsters who are making out like the bandits they are

...under the RICO act.

Instead of rewarding the criminals who caused the collapse, punish them to the full extent of the law. DO NOT let them get off scot-free.

[Odin2005]

35. A bailout is fine, I just don't like how they are going about it.

The end result of this is going to be inflation up the wazoo. I think Paulson and Bernanke are panicking and don't really understand what the f*** they are doing.

[Douglas Carpenter]

36. If a multi hundred billion dollar package is not passed - America will go into a deep

depression along with most of the rest of the world...a depression equal or greater than the 1930's.

One can and should debate about how this bailout should be reconstructed in a way that is more just to ordinary people. One can and should argue that a whole new series of permanent controls need to be put in place. One can and should insist that those most immediately responsible for the most egregiously irresponsible mismanagement should be held accountable and penalized.

But the simple reality is, the American banking system is crumbling due to decades of rabid speculations and rabid lending and borrowing - culminating in the collapse of the housing market coupled with sub-prime crisis. But this problem did not begin with the Bush Administration. It is the culmination of decades of the western economies largely moving from a production based economy to a speculation based economy, financed by a never ending credit line along with decades of deregulation. The Republicans have been the most zealous in pushing this voodoo economics. But plenty of Democrats have gone along with it too. And lots and lots of ordinary people have at times hitched a ride on this speculation hot air bandwagon and have made little and sometimes big fortunes out of it too; not just Wall Street moguls.

The cost of not intervening and intervening quickly with hundreds of billions of dollars in supports will be to condemn countless millions of Americans and perhaps hundreds of millions of people worldwide to total economic destitution and a life of poverty.