You're going to pay for it whether you want to or not.

[Cessna Invesco Palin]

And that's not a threat - it's a statement of fact. A lot of people right now are repeating some variation of the line, "Not with my money!" in relation to their opposition to the bailout. I will state for the record that I am fairly ambivalent about the bailout plan as stated. But here's something I do know through basic deductive reasoning:

Our economy is in large part based upon the availability of reasonably priced credit. This is not just true of large investment banks. It's true of grocery stores, trucking and logistics companies, movie theaters, hardware shops, technology companies - everything.

If the credit markets are not fixed, credit will remain expensive.

If credit remains expensive, the companies that use credit (which is all of them) will either have more difficulty obtaining credit, or will be paying a lot more for the privelege.

If companies can't obtain credit, or pay more for it, their operating expenses increase. So do the operating expenses of the companies they rely upon to deliver services, and any companies which rely on them to deliver services.

These increased operating expenses will be passed on to you, the customer.

When operating expenses increase, some companies will not be able to afford to stay in business, or will suffer large layoffs. Some of those companies will be banks, whose deposits are insured by FDIC, which we all pay for.

With fewer people working, government obligations for programs like unemployment and medicare will rise.

When the cost of government programs rises, the government must either go into more debt or increase taxes - both cost the taxpayer money.

With competition reduced due to bankruptcies, there is less incentive to keep prices low.

With prices of everyday items increasing, people will have less disposable income. More people will find themselves in poverty. More people will go into default on mortgages or other credit obligations. Wash, rinse, repeat.

So regardless of the bailout, this problem is going to cost you money. Failing banks have to have their deposits rescued by FDIC, which you pay for. The cost of government services will increase due to unemployment and inabillity to afford health care. We all pay for that, too. The price of just about everything will increase because of the higher cost of credit. And of course these increases will hurt those with no disposable income most of all.

You might notice that I haven't mentioned the stock market in any of this, and there's a reason for that. The above applies to everyone, not just those with investments or retirement plans that include securities. The above applies to you, regardless of who you are, how much money you make, or what line of business you're in. If the credit market remains broken, we will all be paying the price in the increased cost of goods and services, and the increased cost of government to deal with the failed banks and unemployed.

The question is not whether you're going to pay for it - it's how you're going to pay for it.

End rant.

[aquart]

1. Did you think we haven't been? Please.

[ProdigalJunkMail]

3. so paying more is ok with you? n/t

[sendero]

2. I get that...

.. I just don't want to "pay for it" by handing cash directly to the assholes that caused the problem to begin with.

You are right, there is no free lunch, however I CAN choose just how and who I will pay for my lunch.

[hobbit709]

4. Those of us on the bottom are already getting screwed

So why should I hand the screwers another jar of Vaseline?
I'll be for a bailout if it eliminates golden parachutes, fires the CEOs and directors of the institutions that got greedy and did this, and does something for the screwees instead of the screwers.

[MadHound]

5. Please stop treating us as though we're stupid

Of course we realize that we're going to pay for this one way or the other, Duh! Of course we realize that the economy needs some help, Duh! The point is, with the election just a month away, we're in a position to get a much better deal, and that's what we intend to do, get a deal that puts Main St. ahead of Wall St.

Democracy at work friend, gotta love it.

[fasttense]

6. All the problems with jobs and businesses closing that you describe

will not be alleviated by the Wall Street Bailout. American manufacturing is still being shipped overseas. Corporation still get tax cuts for sending American jobs out of the country. Bill Gates is still pushing for HB1 visas from India. Minimum wage is still barely above when it was first enacted in 1938 (inflation adjusted dollars). Consumers will still spend and borrow less. Families will continue to lose their homes by the thousands daily.

It is the middle class underpinnings of this economy that need shoring up and bailed out, not the uber wealthy and idle rich.

Until the middle class problems are addressed, Wall Street and the American economy will continue to spiral downward.

[Cessna Invesco Palin]

7. It's a matter of degree.

Nobody is suggesting that fixing the credit market is a panacea for America's economic problems. The scenario I describe is much more severe than the problems with outsourcing. However, fixing the credit market will make the above scenario far less likely. In my opinion the main focus should be on confining this problem to the financial industry before it can infect the "main street" businesses. We should have addressed it when it was confined to the housing industry, but we didn't.

[Two Americas]

11. nonsense

No one is suggesting that anyone is suggesting that fixing the credit market is a panacea for America's economic problems.

Damage to main street is the only thing that ever trickles down from Wall Street. Don't try to tell us that helping Wall Street is the only way to help main street. Let's help main street and let Wall Street wait for it to trickle up. That is what works, has worked in the past, and rebuilds the country. Wall Street wrecked the country.

When people have homes and jobs and health care, the economy is doing its job. Wall Street prosperity was based on denying those to people, and now we are being told to give them more or we will be denied more? Please.

Every time wages went down, stocks went up. Every time housing became less affordable for people, stocks went up. Every time jobs were eliminated, stocks went up. Every time plants were moved overseas, stocks went up. Every time health care got more expensive, stocks went up. Why? It was "on the good news."

[Cessna Invesco Palin]

12. First of all...

...I refuse to accept this idea that there are two separate entities called "Wall Street" and "Main Street." This is a gross oversimplification of reality. But if you must insist on using these terms...

Let's help main street and let Wall Street wait for it to trickle up.

Main Street is not the originator of credit. Wall Street is the originator of credit. No amount of money or assistance given to Main Street will wipe the bad debt off Wall Street's books and get the credit markets working again. Using the scenario I described above, where do you inject money in order to get the credit market working again? Or is it your assertion that the credit market isn't the biggest problem?


Every time wages went down, stocks went up. Every time housing became less affordable for people, stocks went up. Every time jobs were eliminated, stocks went up. Every time plants were moved overseas, stocks went up. Every time health care got more expensive, stocks went up. Why? It was "on the good news."

This is not a stock market problem. This is a credit problem. This is not a repeat of 1987.

[Two Americas]

16. ok

Credit problems are a lack of confidence. Protecting the home owners and small businesses and jobs restores confidence. As confidence is restored, credit is restored. The economy existed before credit, and credit reflects confidence in the economy. The economy is driven by the people working and earning decent wages.

How do you eat? Govermment programs that made sure that farmers could stay on the farm and not be subject to the ravages of the financial industry and the free market (changing now unfortunately.)

[Cessna Invesco Palin]

18. "Credit problems are a lack of confidence."

How does giving small businesses money do anything to resolve the credit problem? The bad assets are the problem. I like addressing problems directly, and I think 90% of this trickle-up/trickle-down stuff is patent nonsense. Fix the damn problem at its source.

[Two Americas]

19. that is what worked in the 30's

If production and employment is threatened by a lack of access to capital, the government is the lender and employer of last resort.

The bad assets are whose problem? I know that some people want to say they are everyone's problem, and of course we are all going to be impacted.

The question is this: does the government help the lenders and trust that this will work for the people, or help the people directly and regulate and manage the lenders in the public interest? We have been trying the first, it hasn't worked, and we now face a crisis. Public programs must now do the things that private programs have failed at.

[Cessna Invesco Palin]

21. This kind of proves my point: Attack the problem at the source.

Consumer debt and deflation were two primary moving forces behind the great depression (though hardly the only ones.) Those aren't the issues that need solving here. And we're not *in* a depression yet. You don't take the same approach to solving an existing depression/recession as a potential one. There is no one-size-fits-all approach to solving financial problems.

[Two Americas]

23. well I don't know what your point is

You aren't making your case with me.

Spell it out and we can talk about it.

[Cessna Invesco Palin]

24. We simply differ in our approaches to solving the immediate problem.

I would rather not wait for it to infect the larger markets outside of housing and finance, which is what will happen if the problem is not solved at its source, quickly. I don't think we disagree about the need for far greater regulation of the financial services industry to ensure that this never happens again.

[Two Americas]

25. fair enough

I am not advocating any particular plan. It is hard to tell who is covertly making libertarian or right wing arguments, and who is sincere and has a plan in mind. Throwing out some New Deal talk can clear the air on that. More often than not, it gets no response. I take that as a response. The person does not want to go there because they cannot effectively make a right wing argument here if it is revealed to be that.

Describe the source and exactly how you see the remedy being applied and what the effect of that will be, if you would.

I agree with what you see as the goal.

[Cessna Invesco Palin]

26. So far I'm liking Warren Buffet's idea...

...of buying up the damaged debt at market value. The government shouldn't pay one penny more than the market value of these assets, and the financial firms shouldn't be given "free money" for their problem debt. Actually, I'd like that combined with Pelosi's idea of a tax or fee on the financial industry which would be invoked if the government lost money on its "investment." There's nobody but the federal government who has the ability to put up the kinds of money necessary to fix the short-term problem, but in the long term the financial services industry needs to pay for its rescue.

As for the longer term issue of ensuring that this never happens again, I think there needs to be much better regulation of lending (especially mortgages.) I'll leave it to the economists to decide exactly what we need to do about the derivatives market, but there is no way in hell anything like the current credit default swap market should ever exist again. It has almost unlimited potential for abuse.

And we should also repeal Bush's odious bankruptcy legislation, which was nothing but a giveaway to the insurance and banking industries. I think that more than anything would help people who find themselves in trouble with subprime mortgages.

[Two Americas]

27. very good, thanks

You say "buying up the damaged debt at market value. The government shouldn't pay one penny more than the market value of these assets."

Why cannot the institutions get market value without government involvement? Or is "market value" not really market value?

[Cessna Invesco Palin]

28. Market value is market value is market value.

Institutions can't get market value for these because other institutions don't have the means to buy them and mitigate the risk. And in this case mitigating the risk means just-about-unlimited access to inexpensive borrowing. The government has this. Nobody else does. This has been Buffet's position - basically that if he were able to borrow money at the rate and in the quantities that the government could borrow money, he'd be buying this stuff up himself, expecting to make a profit.

[Two Americas]

29. market value

Market value is what someone is willing and able to pay for something. How else can it be established?

[Romulox]

13. "The scenario I describe is much more severe than the problems with outsourcing."

Yeah, because you feel this threatens your well-being.

Do you not understand why, But it's MY money this time! isn't a convincing argument? :eyes:

[Cessna Invesco Palin]

14. It doesn't threaten my well being so much, really.

I don't have any investments riskier than an FDIC-backed money market account, and I no longer live in the United States. I also work for an extremely successful, relatively recession proof company, so I'm in no immediate danger of losing my job. That was kinda my point - the stuff I'm describing impacts just about everyone, not just those with high-risk investments.

[Romulox]

15. Well then, how are you qualified to say that this problem is more important to ME than outsourcing?

:wtf:

[Cessna Invesco Palin]

17. I said nothing about the importance of the problem to a particular individual.

I said the severity of the problem will be greater, especially in terms of the number of people who are affected. I'm at much higher risk of having my job outsourced (I'm in the technology industry) than I am of losing it due to this problem.

[Romulox]

33. I understood what you meant, but I don't think you got my meaning.

In the first place, I was attempting to speak figuratively by saying, "me"; I am personally not in any financial distress. As a white collar guy who grew up working class, I will always identify with the little guy.

"I said the severity of the problem will be greater,"

I have no idea what you mean by "severity". I can only surmise you mean that your community will be affected more than it has been from outsourcing. However, from my perspective, you can begin making the claim that this problem is "more severe" when Manhattan looks like downtown Detroit.

"I'm at much higher risk of having my job outsourced"

I'm sorry to hear that. I personally am more secure than I've ever been in my life. I am concerned about my community. I am as concerned about your community as you are about mine. :hi:

[PVnRT]

22. If you're going to take someone to task for being selfish

try not being selfish yourself.

[Romulox]

30. It's selfish to advocate my self interest in a democracy? No, it's my responsibility. nt

[theDash]

9. how about this ...

to cover the additional cost of credit in the event that a corporation engaged in activities that led to this mess, they suspend the CEO's bonuses until he gets the company going in the right direction again and cleans up their books and can show a real and responsible profit.

[Cessna Invesco Palin]

10. I like the idea of a tax on financial institutions that Pelosi suggested.

That seems like a completely reasonable way to recoup the cost without the government getting into the day to day management of these places.

[tama]

8. The Bubble that bursted:

[Two Americas]

20. the choice is clear

The free market has failed to provide employment, health care, housing and credit.

We can do what we know works, what we know will pay dividends, and use public monies and programs to do the job that private industry has failed at.

Or we can take another gamble, another wild ride on the free market express, that may pay off, that may provide employment, health care, housing and credit, and use public monies to shore up and kick start the people who are already failing at all of this.

The credit crunch is a problem because people can't wearn a decent wage, and can't afford health care and housing, and businesses (that produce things) need capital. That is the problem, not fixing the banks in the hope that they may this time be trustworthy.

The financial institutions need their wings clipped, not their pockets lined. They need to work for us, not force us, our children, and our grandchildren to work for them and pay for their mistakes with nothing in return.

[ibegurpard]

31. Has anyone here actually been stupid enough to suggest

that they think everything will be just fine without the bailout? I think not...I think everyone realizes we're in for major pain one way or the other. What I've seen so far leads me to believe the "bailout" as it has been discussed so far will make things worse in the long run. If we are going to have some sort of intervention then everything that has been discussed so far needs to be scrapped and we need to start fresh.

[ddeclue]

32. Stop it with the sky is falling chicken little scare tactics...

I will NOT be pressured into anything... too bad... I know better, I've been living in Bushmerica for the last 8 years.