If only Paulson's bailout proposal were just another bad dream from the Bush cabal.
I managed to navigate the difficult waters of after-divorce-dating in middle age without getting into any trouble, meeting anyone awful, or being seduced by even one low life. I had great fun, met some interesting men, and although I had neither the intention nor the desire to marry again, met the wonderful man who became my second husband.…
Article comments
— go to most recent comments26 - Jonathan Scanlan
Ya know something, I've given this a bit of thought and I suspect it would be a real boon for Obama to renounce the bailout.
Not just because of the economic populism, but because it would enhance his message of McCain following Bush's lead, and his own status as not being part of the system.
It's somewhat akin to Rudd's statement during our last election that "this reckless spending must stop." By underspending he took all economic credibility out of Howard's government (even if there was little difference between the policy budgets).
27 - Heloise
Right on Jonathan. Huffpo is calling for Obama to object to the bailout job. And someone was just holding what he said was five financial experts from other countries who said that this plan was a piece of crock.
But guess what? We, the freakin people are smarter than the experts. A study showed that a crowd or group mentality on an issue was usually close to 100 right versus one or two people.
People have not only no power but no voice when they are right. And no it was not the people who made bad loans, it was the damn banks. No one short of robbing a bank can go in and get a loan. Especially not black people. It is rigged against you from the start.
The bailout is on hold now and that's a good thing. And NOW they are saying they won't give out all the money at once. WTF? why would you give that Paulson yahoo all that money just kuz he asked?
Yeah, and I need a couple of those millions while you're at it.
Heloise
28 - handyguy
McCain's trip to Washington, whether this was the intention or not, has been turned into an opportunity for House Republicans to torpedo the deal.
Lisa, the hard-conservative wing of the GOP is on your side with this one. Does that not disturb you just a little?
There's a danger that this is going to become a despicable election stunt/set-up to try to benefit McCain. It's really ugly. Fortunately it is unlikely to work.
PS Each and every one of Dave's comments on this thread is grossly inaccurate, misleading, based on half-truths and non-truths. He should be ashamed of abusing the facts in this systematic, partisan manner.
29 - troll
...Dave has gone off the deep end of the partisan pool and it is unreasonable to expect him to get his head back above water until after the election
perhaps the prospect of a depression has unhinged him
30 - bliffle
Part of Daves nonsense:
Social Security is going to HAVE to be privatized. The sham can't be maintained, and the stock market needs the boost. We're also going to have to cut corporate taxes to 15% to increase jobs and draw capital back into the economy.
SS has run a surplus, NOT a deficit, every year for 25 years. There's a couple trillion stored up in that surplus for future payouts, plus, slight tax adjustments for running costs in a couple decades. Nevertheless, some liars say the SS is broke! Can you imagine!
It's never been shown that federal money pumped into the stock market improves the economy. It's just a theory.
It's never been shown that cutting capital gains draws money back into investment. It's just a theory.
However, it has been shown that pumping money into the CONSUMER end of the economy DOES have a big effect on the economy. In fact, that's why Ben "Helicopter" Bernanke once suggested hiring helicopters and flying over metro areas throwing money out to the citizens.
Economic pace in this country is determined by consumers, not producers. First comes demand, then producers create the supply. And if US producers just can't seem to come up to scratch (like the auto makers failing to make green cars) then there are plenty of foreign makers who will.
31 - handyguy
The Economist offers this interesting observation on TARP [btw, the British magazine supports the plan but believes including executive pay limits in it will cause some banks not to participate, making it less effective]:
If the economics of Mr Paulson’s plan are broadly correct, the politics are fiendish. You are lavishing money on the people who got you into this mess. Sensible intervention cannot even buy long-term relief: the plan cannot stop house prices falling and the bloated financial sector shrinking.
Although the economic risk is that the plan fails, the political risk is that the plan succeeds. Voters will scarcely notice a depression that never happened. But even as they lose their houses and their jobs, they will see Wall Street once again making millions.
32 - bliffle
Throwing 700billion into the banking end of the economy is like throwing a glass of water on the desert.
This country has about $550trillion in paper ("extrinsic" value, as economists say) riding on $45trillion of real assets ("intrinsic" value), i.e., houses, cars, factories, tools, etc.
To try to solve financial problems one should aim at the Real Assets with intrinsic value, not the fictional extrinsic paper assets.
Thus, we should aim financial help at the sectors occupied by intrinsic value, i.e., homeowners, real estate owners, tool owners, etc.
When you throw money at the "extrinsic-valued" assets you are throwing money away. In addition, you have to cash in real assets with intrinsic value to perform the exercise.
If all those 'banks' and whatnot were to collapse new ones would arise in their place unencumbered by the old systems sorry fate.
33 - bliffle
The financial sector is waaayyyy over grown.There's derivative upon derivative, none of which add any value.
Financial is overdue to take a haircut.
The Federal Reserve is largely responsible for the political irresponsibility that has enabled the financial to get out of control. The Fed has taken as it's goal to control inflation. But they've done it with tricks and stunts, and ultimately they simply bottled up inflation and distorted the economic system. All the inflationary pressure got channeled into house prices.
If the government is spendthrift then the natural result is inflation. For example, by starting a war that serves no national interest, just the narrow private interests of some powerful people, the government borrows money, which natural result upon joining the money already there, is to bid up prices.
But the same powerful people who agitate for war HATE inflation beause it means that their takeout depreciates in real value, forcing them to find promising investments. What a nuisance! They may even have to invest in companies and people. They may even lose! But with inflation they can't leave money stuffed in the mattress anymore.
So house prices go up disproportionately to wages until a collapse.
The 'subprime' loans are not the problem. Many borrowers with prime loans are forfeiting.
34 - Lisa Solod Warren
Yes, handyguy, it does seem weird that the ultra conservatives oppose the bailout. The whole damned thing boggles the mind. Many progressives think like I (and bliffle seem to) NO bailout.
Others and moderate Repubs want a bailout of SOME sort, with privisos.
And then I heard last night that the uber conservs had come up with some sort of plan themselves;; it's 7 a.m. and I have not yet looked at the news to see what that is
Part of me thinks that Obama is being pressured into going along with some sort of plan, although I wish he WOULD NOT. I am not sure why the Dems feel like they have to, when it seems like a lot of the public don't really want a bailout that has anything to do with helping the rich....
Why NOT just bail out the people. change the bankruptcy laws as Obama wants to do?
I know a fair amount of economics but now I am getting a bit hornswoggled meself....
Frankly, I don't really believe this particular bailout, even with the privisos the Dems and mod Repubs have asked for and Paulso has said he wil give will do a damned bit of good and the it won't pass anyway....
Oy.
35 - Cannonshop
Lisa, I'm surprised that You're surprised. Conservative backlash against George Senior was mostly driven by his son's involvement in the S&L scandal (Neill Bush), and the bailout that followed.
I'm actually a little teensy bit surprised that you lefties have any opposition to it at all, since the whole mess was driven by policies YOUR side supported, including laws and regulations that removed such obscure ideas as "Creditworthiness", A Job/Employment, and standards from the issuing of Home Loans.
With predictable results. The Bailout itself is a perfect example of how Democrats/"Liberals" address a problem, so to be quite honest, I'm surprised that you aren't shilling for it.
36 - Lisa Solod Warren
Read my earliers post.... Bush caused this mess at least as much or more than anyone. Get your facts straight. And McCain/Gramm were right in there. PLUS the Wall St. greemongers. If you did some research you would know many many on the left completely oppose this bailout. So temper your suprise and stop trying to guess my politics. They are far more complex than you could guess.
Don't forget who came up with this bailout. Paulson, who took his 20 mil before he became Bush's toady.......
At least the Dems are TRYING to soften it and get something back for Main St.
37 - Lisa Solod Warren
I certainly feel this way which is that revising bankruptcy laws so that homeowners can stay in their homes is imperative. Not only will they lose their homes, they will most likely lose their jobs and they will also be disenfranchised.....which means that once again the election won't be about individual voters, but will fall to someone else making the decision.
38 - Les Slater
Lisa,
“…revising bankruptcy laws so that homeowners can stay in their homes is imperative.”
It is becoming so clear to the majority of the population that Paulson et al, have interests that are at serious odds with the rest of us.
A nationalization of all mortgage debt could be defended such that a majority would support it. For all practical purposes much of the mortgage debt is being nationalized. We should fully nationalize all mortgage debt and take it totally out of the hands of the banks. End all foreclosures and compensate for those that have taken place since this crisis began.
Most housing bought in recent years is not worth anywhere near its market price. Re-price by some formula, including income, what the occupants of those homes should pay for rent or mortgage payments. The nationalization of mortgage debt should include all loans collateralized by rental property and strict rules as to rental prices and eviction instituted.
Les
39 - Clavos
...strict rules as to rental prices and eviction instituted.
Like they do with Section 8 housing, from which the landlords make money hand over fist -- taxpayer money?
That kind of control?
Les, I keep telling you, unless you fire the entire Civil Service corps and start over again, everything you turn over to them in your Utopian society will be scammed six ways from sundown and turned into shit.
I speak from experience.
40 - Les Slater
Clavos,
“Les, I keep telling you, unless you fire the entire Civil Service corps and start over again…”
I don’t recall you ever telling me, this but your point is well taken. I agree. I’ve never been a fan of poverty pimps. BTW, they are a significant constituency for the Democratic Party machine.
Les
41 - Clavos
I stand corrected, Les, I think I mentioned it to you some years ago (It's too unimportant to go look for it), but you're right, I haven't been repeating it directly to you, though I express it frequently.
I've never been a fan of poverty pimps. BTW, they are a significant constituency for the Democratic Party machine.
Quoted for Truth.
42 - troll
...yessiree - our 'better world' should be based on a purge of bureaucrats (and whatever valuable skill sets they personify)
that will be useful
everybody needs a scapegoat I guess
43 - Andy Marsh
That's it, let's become a nation of gubment housing!!!
What a crock. Do we really want the federal govt running the mortgage industry?
I know, that's probably a yes from all of you that also want it to run the health care industry...
So, we're gonna bail out all these idiots who got into houses they had no business being in...such a beautiful utopian idea...and I see some want to stop foreclosures all together. Does that mean that I can stop paying my mortgage too?
...what do I get for being a responsible homeowner? For paying my bills on time? Oh yeah, that's right, the satisfaction that some fucking loser didn't get kicked out of his house and now, since he or she isn't paying for it anymore they're not taking care of it and it's becoming gubment housing...and there go my property values....
The left started this shit by forcing lenders to give money to people that had no business getting it in the first place! Fannie and Freddie were allowed to use unemployment insurance and welfare as income on a home loan application! Does anyone really think that someone on unemployment or welfare really belongs in a mortgage situation?
44 - Ruvy
I read your article and noted all the things you Americans no longer have money for and cannot pay for - like victims from Katrina, for example.
And you can't seem to get it through your thick skull that if your government can only think to hand money to the rich and deny the poor anything - which is what you make out this bailout to be (I tend to agree), then why shouldn't your economy collapse?
How long do you think the world will agree to finance the stupidity of your leaders, particularly given that they do not have the brains to literally put a pistol to everyone's heads and tell them to forgive your debts or die?
It so happens that I can point to a number of Biblical verses that warn of just this, but leave off the religion for just a moment. Your country is a sinking boat, and we here will survive the demise of the United States when it occurs. And we will eat and drink water (something many of you may not do), and we will have shelter (something many of you may not have).
Wake up, Lisa! America is no safe harbor for Jews! It was once, and I'm truly grateful for the safe harbor it gave my father and mother, may they both rest in peace. But it is no longer. The "liberal" media - along with everyone else - will soon be screaming for the head of the "Jew Greenspan" - along with all the other supposedly well off Jews in your country - like yours and those of my nephews, nieces and cousins who continue to delude themselves that America is a safe haven for them.
45 - Jordan Richardson
Do we really want the federal govt running the mortgage industry?
No! The government shouldn't be running anything!
46 - Lisa Solod Warren
Andy, do you read the other posts, at all?
It was the LIBERAL DEMOCRAT President Bush who in 2002 went on TV and made a speech talking about how he was going to instruct Fannie and Freddie to make loans to those with no credit and no downpayment so they would be able to buy houses they could not afford...........
That lefty.
FOR ALL OF YOU:
Here is something I just got from a friend. It's pretty clever......
I'm against the $85,000,000,000.00 bailout of AIG.
Instead, I'm in favor of giving $85,000,000,000 to America in a 'We Deserve It Dividend'.
To make the math simple, let's assume there are 200,000,000 bonafide
U.S. Citizens 18+.
Our population is about 301,000,000 +/- counting every man, woman and child. So 200,000,000 might be a fair stab at adults 18 and up.
So divide 200 million adults 18+ into $85 billon that equals> $425,000.00.
My plan is to give $425,000 to every person 18+ as a 'We Deserve It> Dividend'.
Of course, it would NOT be tax free.
So let's assume a tax rate of 30%.
Every individual 18+ ha> s to pay $127,500.00 in taxes.
That sends $25,500,000,000 right back to Uncle Sam.
But it means that every adult 18+ has $297,500.00 in their pocket.
A husband and wife have $595,000.00.
What would you do with $297,500.00 to $595,000.00 in your family?
Pay off your mortgage - housing crisis solved.
Repay college loans - what a great boost to new grads
Put away money for college - it'll be there
Save in a bank - create money to loan to entrepreneurs.
Buy a new car - create jobs
Invest in the market - capital drives growth
Pay for your parent's medical insurance - health care improves
Enable Deadbeat Dads to come clean - or else
Remember this is for every adult U S Citizen 18+ including the folks who lost their jobs at Lehman Brothers and every other company that is cutting back, and of course, for those serving in our Armed Forces.
If we're going to re-distribute wealth let's really do it...instead of trickling out a puny $1000.00 ( "vote buy" ) economic incentive that is
being proposed by one of our candidates for President.
If we're going to do an $85 billion bailout, let's bail out every adult S Citizen 18+!
As for AIG - liquidate it.
Sell off its parts.
Let American General go back to being American General. Sell off the> real estate.
Let the private sector bargain hunters cut it up and clean it up.
Here's my rationale. We deserve it and AIG doesn't.
Sure it's a crazy idea that can "never work."
But can you imagine the Coast-To-Coast Block Party!
How do you spell Economic Boom?
I trust my fellow adult Americans to know how to use the $85 Billion
'We Deserve It Dividend' more than I do the geniuses at AIG or in Washington DC.
Remember, The Family plan only really costs $59.5 Billion because $25.5 Billion is returned instantly in taxes to Uncle Sam. Talk about a
stimulus package!
Ahhh...I feel so much better getting that off my chest.
Kindest personal regards,
A Creative Guy & Citizen of the Republic
PS: Feel free to pass this along to your pals as its either good for a laugh or a tear or a very sobering thought on how to best use $85 Billion!!
47 - Andy Marsh
LIsa - I also read the NYT piece from September 11, 2003 where the liberal president bush said that we needed to rein in fannie and freddie, the same piece that said that barney fag said there was nothing wrong with fannie and freddie. And I really hate to tell you this, but this problem started long before bush got to the white house...
But on another note, I like your friends idea!
48 - Andy Marsh
But I also try to avoid reading the stuff you write...it's way to left of center for me...
49 - Andy Marsh
and the spelling and grammar are usually atrocious!
50 - Lisa Solod Warren
Andy, as usual, Bush talks out of both sides of his mouth as I heard his radio speech from 2002 encouraging Fannie and Freddie to make those loans; you may send me the old NYT link if you wish. I am always happy to see Bush contradict himself.
Do you think it's necessary to mention someone's sexual orientation in such a derogatory way? Should we call you Andy cocksman? Or Andy horndog? Or perhaps, along with other fellows on the site Andy misanthrope? Or Andy misogynist?
Your remarks about my spelling and grammar are completely gratuitous and, also, as you know, completely untrue. (Case in point, you're own comment has yet another misspelled word:) But I bet you knew that, right? And thought it was funny?!
Naturally, I don't give a damn what you think of my politics.
51 - MrsDblR
Ummm - the friend you quoted must have gone to the same school as those in charge of the companies going under. $85b divided by 200m people is only $425 not $425,000. Too bad too because I already had mine spent!!!!
52 - Lisa Solod Warren
Oh,dear. Well, it wasnt my friend, it was sent by a friend to me. I just knew it was too good to be true.
Try dividing 700 billion and see what you get....
Darn, I already spent mine, too.
Good think I never tried to get a job as an accountant.:)
53 - Lisa Solod Warren
(wasn't)
54 - Jordan Richardson
Case in point, you're own comment has yet another misspelled word
Sweet, sweet irony.
55 - Andy Marsh
But you see, I don't give a rats ass about my speling, you pointed out how bad my spelling was yesterday and then followed it with a comment a little while later that had at least three misspelled words...I pointed them out and you ignored me, which is pretty typical of all your comments here at BC. You pick out what you want from a comment and respond to that, but ignore the actual meat of the comment...you throw stones all the time, pretending to be perfect when you're far from it...
I've already posted a link to the 2003 NYT article, apparently, you weren't paying attention then either. But I understand, I ignore you all the time too!
And yeah, I purposely spelled spelling wrong...
...and lastly, I don't like barney frank, not even a little bit, but that's pretty much how I feel about all pols that come out of mass...I wasn't the first one to call him barney fag, but I liked it and it kinda stuck with me...sorry if that offends you, sure hope you can get over it.
You can call me whatever you like Lisa, trust me, I've been calling you all kinds of names...just not here at BC, because we're more civilized than that!!!
Just try not to hurt my feelings, I'm very sensitive.
Have a nice weekend!
56 - Les Slater
Andy,
“The left started this shit by forcing lenders to give money to people that had no business getting it in the first place!”
The left? You mean Greenspan, Paulson, Graham et al?
The housing bubble was deliberate, especially as it applies to the poor. In his memoirs published last year, Alan Greenspan, defending the feds role in pumping up the housing market stated, “I was aware that the loosening of mortgage credit terms for subprime borrowers increased financial risk, and that subsidized home ownership initiatives distort market outcomes. But I believed then, as now, that the benefits of broadened home ownership are worth the risk. Protection of property rights, so critical to a market economy, requires a critical mass of owners to sustain political support.”
Left? My ass.
Les
57 - Deano
$700 billion split by 200 million people is still just $3,500 each...
Looks like the sudden wealth is, as always, mostly imaginary.
This election season could conceivably get stranger but it would have to involve either McCain or Obama hopping on a motorcycle and jumping a shark....
58 - El Bicho
"It's stopping the Democrats from turning this bailout into another opportunity for them to suck billions away from taxpayers"
Yeah, because the Republicans haven't sucked away billions.
59 - Les Slater
re 56,
Hasn't anyone noticed that Greenspan's statement is a SMOKING GUN?
60 - Lisa Solod Warren
Oh, Andy, you are such a sad, pathetic little man.
Calling me names all over the place? You know what they say about people who talk about other people, don't you? They have no life.
I have never even thought a moment about you off this list, never mind spoken about you.
You poor poor poor sad little man.
61 - Les Slater
Lisa,
The housing bubble was deliberate. It was known to have risks. The whole federal machine was complicit, and it was explicitly designed to use poor people to prop up the ‘market economy’ by getting them to buy, subsidized no less, property, to assure their ‘political support’ for the system of ‘property rights’.
We have Alan Greenspan’s signed confession (see my 56). What more does anyone need?
Les
62 - Clavos
We have Alan Greenspan's signed confession (see my 56).
So what should we do
withto him?63 - Lisa Solod Warren
Agreed. But first, somehow the American public has been led to believe that owning a home is in the Constituion or something. Or the Bill of Rights. People own homes, and the amount of home, that they can afford, WHEN they can afford it. WHO the hell NEEDS a 5000 square foot McMansion with a 3 story entryway? And who on earth thought up to build those monstrosities on quarter-acre lots and sell that as style, at 4000 grand a month, to Mr and Mrs America.
When we buy most of our oil from foreign countries, and when we are so far gone down the path of energy INefficiency....?
Greed, pure and simple, got us into this mess. And throwing money after it is NOT going to get us out of it.
Unscrupulous lenders, homebuyers who had no idea what they were doing, greed, desire to keep up with rock and movie stars, it's all part of our so-called American Dream.
Owning a business is great, making something and selling it is wonderful, creating jobs is good. But buying and selling nothing is nuts. And accumulating goods just for the heck of it is nonsense. We all buy into it(well most of us do) in one way or another, I know I have at different times. But the wretched excesses need to stop. We need to take a look at ourselves and ask some hard questions at just what we can really afford.
Look at what the Chinese have done to their country with their hellbent capitalism, while at the same time they still practice the worst fo communism on their people, oppression and worse, while destroying their environment, their people,killing their babies, all for the almighty "dollar." With not a thought in their heads or an eye toward what it is they are really doing.
We have exported greed, not democracy. And right now, this bailout provides a lousy example of trying to "fix" a problem of our own creation.
64 - Les Slater
Clav,
It’s not just him. He was just one member of the gang, now retired. This was a conscious plan involving many senior players at the head of the financial system, not just one chairman of the fed not taking his meds in a timely fashion.
It’s not a question of what we should do to him. We need to take a sober look at the system where this happened and come up with proposals based on what we find.
Les
65 - Les Slater
Lisa,
“…somehow the American public has been led to believe that owning a home is in the Constituion or something.”
It’s not, nor do I think it should be. However, the right to decent housing should be.
“WHO the hell NEEDS a 5000 square foot McMansion with a 3 story entryway?”
Your right but I don’t believe we should forbid such.
“And who on earth thought up to build those monstrosities on quarter-acre lots and sell that as style…”
Some with Grecian column porticos; it’s sad.
“Greed, pure and simple, got us into this mess.”
Here’s where we disagree. I’ve been using the Greenspan confession as evidence that this whole mess was designed to prop up a SYSTEM, which since 1987, has been doomed to failure.
We need to replace the system.
Les
66 - Clavos
WHO the hell NEEDS a 5000 square foot McMansion with a 3 story entryway?
Al Gore?
At least, that's what I've been told by his supporters every time I've tried to point out his failure to practice what he preaches.
67 - handyguy
OK, if Bernanke and Paulson just happen to be right [a lot of smart people do think so], and if the current populist know-nothing reaction against the Paulson plan actually does derail it, and if we actually do see a deep recession/depression result, with double-digit unemployment etc....
....then will you be happy?
Consider the consequences of what you are saying. Keep some semblance of an open mind.
Oh, I forgot, this is the Blogcritics comments section. Open minds not allowed here.
68 - bliffle
I still haven't seen the justification for any bailout, let alone $700billion.
Do they really know anything, or are they flying by the seat of the pants/
69 - handyguy
Nobody can know for sure.
But I don't want to take the chance of real devastation, so I'm willing to let some version of the plan go forward.
70 - bliffle
I don't want to see ANY version of the Paulson plan until I see someone venture an explanation of how this will solve the problems we have.
And why is this a better plan than Bernankes old plan to throw $100 bills from a helicopter?
71 - bliffle
"Nobody can know for sure. "
This sounds like a 'no', to me.
72 - handyguy
The plan is not designed to 'solve problems.'
It's intended to prevent imminent disaster. No conservative Republican is happy about handing over huge amounts of government money this way. They're not throwing a party here, they're frightened that it's all about to go down the tubes within weeks or months.
If you don't believe that will really happen, fine, but you'd better be sure. Once it's happened, it will be too late to put the genie back in the bottle.
73 - Clavos
I'm with you, bliffle. Not only do they not have a clue, they're playing gotcha politics with it.
One more reason why I say they are clowns.
74 - handyguy
Throwing out stink bombs won't solve problems or prevent a financial disaster.
It may be good fun to poke government officials in the eye on here.
But 10-15% unemployment, credit drying up, local banks folding nationwide...those won't be fun.
Willing to risk it? Really? Are you that sure you're right? What makes you so wise?
75 - handyguy
The excellent Steven Pearlstein in the Washington Post says it lots better than I:
You're angry. I'm angry. House Republicans are angry. We're all angry at having to put up huge amounts of cash to rescue a financial system because a lot of very rich people rolled the dice with other people's money and lost.
Now let me tell you something very simple and very important: You can try to prevent a financial meltdown or you can teach Wall Street a lesson, but you can't do both at the same time.
So which will it be?
You say you want straight talk -- no spin, no bull, no sugar-coating. Okay, here goes.
First, stop fixating on Wall Street executives -- there will be time to deal with them later. Even if you clawed back every dime they made over the past decade, it would come to several billions of dollars. That's a rounding error compared with the size of the financial problem we're facing here.
Second, we need to act quickly. The financial situation is now downright scary. Don't look at the stock market -- that's not where the problem is. The problem is in the credit markets, which are quickly freezing.
Banks and big corporations and even money-market funds are hoarding cash, refusing to lend it out for a day or a week or a month. Even the best companies are having trouble floating bonds at reasonable rates. And the shadow banking system -- the market in asset-backed securities that ultimately supplies the capital for most home loans, car loans, college loans -- is almost completely shut down.
People are so nervous, and there is so much distrust, that all it would take is one more hit to trigger the modern-day equivalent of a nationwide bank run. Financial institutions would fail, part of your savings would be wiped out, jobs would be lost and a lot of economic activity would grind to a halt. Such a debacle would cost us a lot more than $700 billion.
Third, the latest proposal hammered out between the Treasury and Democratic leaders won't cost anywhere near $700 billion unless we get a 1930s-like Depression, in which case we'll have much bigger problems to worry about. Depending on how the program is managed, and how things turn out with the economy and the housing market, the best guess is that the government could wind up either losing or making a couple of hundred billion dollars. The final tab is simply unknowable.