If only Paulson's bailout proposal were just another bad dream from the Bush cabal.
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76 - bliffle
IMO we don't know what the problem is and what got us here, and so we are poorly prepared to figure out what to do.
And that goes for Messieurs Paulson and Bernanke, too.
P and B come forward and present us with a horrendous solution to a problem they say they have just discovered.
Huh? How can we evaluate any of that? If it is such a big problem, then how did these guys miss seeing it coming down the road? Why have they been spouting soothing words all this time and NOW they see a big problem? It defies common sense.
Will they disclose to us lumpenproles what horrible monster frightened them?
And why were their eyes blind to the problem of 2 million foreclosures? Was it ideological blinding, like Katrina, where the problems of "those people" could not be allowed to disturb their peace of mind? Did it only rise in importance when their patrons were threatened? And we can hardly doubt that Wall Streeters are their patrons.
If so, how much trust can we give them?
Are YOU willing to trust these guys (whoever they are, for we know little about P and B) with $700billion? They're like strangers that we just met on a used car lot. Would you buy a used car from these guys?
And after the first $700billion and they come back for more, as we all know they will, how can we judge their performance to date?
77 - Les Slater
handtguy,
“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.”
That’s a load of crap. Teach Wall Street a lesson? For what purpose?
There’s only one force that forecloses on homes or otherwise evicts people. That’s the government with its courts and ultimately its cops. We can demand that the government not do that. It’s for the common good.
Why should we allow the government to do the bidding of loan sharks? The whole process was rife with fraud. The private banks don’t deserve to hold title or lien to any residential property of any of our population.
To the extent that their mismanagement caused the present crisis they should not be allowed another chance. Let them go down.
To the extent of further inability by these clowns to keep any part of the economy running, take that away from them too.
Society is not so complicated that the majority of us can’t find a way, with complete and total transparency, to democratically run what we need to run.
Les
78 - bliffle
If we propose to solve the credit problem by throwing $700billion at it and there were 2 million foreclosures, then maybe the best thing to do is copper the foreclosed mortgages on behalf of the borrowers. Let's see, that gives us about $350k to work with on each loan. Seems to me that's a solution, especially if the feds take over the outstanding mortgages, on terms that are favorable to the feds and the borrowers without much regard for the institutions and their investors and officers.
The money thus freed would probably establish new institutions in place of the old defunct ones.
After all, the purpose of the bailout is to benefit the system by restoring credit flow, not to just bailout the institutions.
79 - Lisa Solod Warren
I am still not convinced that this 'Plan' has been well enough thought out. If these guys with the Plan are the best and the brightest, I think we are in trouble. Surely, we can gather the smartest economists and businesspeople around and have them come up with something that covers MORE bases than I have heard so far so that IF we spend this kind of money we are really making sure that it DOES do what we supposedly need it to do and it DOES avert the kind of disaster we need it to avert and it IS worth the kind of money we are talking about. I am NOT convinced. All I see, still, is a blank check and not a lot of checks and balances.
80 - bliffle
Those guys aren't as smart as they think. They've been able, in the past, to force policies that covered up bad ideas that were the product of doctrine, not thoughtful consideration. Thus, they were able to dress up their porcine ideas to appear better without even the use of lipstick.
81 - handyguy
Sorry, but you guys keep missing the point.
If the system melts down, there won't be any 'problems' left to 'solve.'
There will be disaster instead of just a scary mess.
The Paulson plan is designed solely to avert a meltdown.
The rest of the mess will still need to be addressed. It's just that the banking system and employment as we know it will continue to exist rather than morphing into apocalyptic failure.
All of you are too busy shouting platitudes and slogans to stop and think.
Would you prefer to wait for the meltdown to happen, then try to 'fix' it? If so, then your mouths are moving faster than your brains.
82 - Les Slater
bliffle,
“Those guys aren't as smart as they think.”
Maybe, but I would bet they’re a lot smarter than you think they are. They can afford the best and brightest. The problem is what they are trying to solve is unsolvable.
Alan Greenspan’s confession shows that the engineered housing bubble was not only deliberate but quite sophisticated and ran deep with ideology, beyond any particular doctrine. Their only problem is that they are working with the assumption that capitalism is viable.
This is also the problem with the majority of posts on this blog. That’s why any attempt at providing an alternative plan to this crisis is quite rare here.
Your #78 is one of the rare attempts at an alternative solution. Looking at the idea of having $350k to throw at each of 2m defaults shows the enormity of the problem and how little that $700b is going to solve. The problem goes way beyond housing, and adding more liquidity, so far, has not convinced any of these turkeys to loosen the credit spigots.
The problem is a long term trend toward a reduction in the rate of profit, see my #25 in ‘In Defense of the Capitalist System’. The fundamental problem is not liquidity but a reluctance to invest in productive enterprise. The $700b will mostly go toward investing in parasitic ‘enterprise’, the reason we’re here in the first place.
People will look at my #77 and say it is Utopian. But why? It does pose a temporary danger to the smooth functioning of the economy but would it be any worse than the great depression, which we're facing anyway? Capitalism only began coming out of that depression by war spending.
The war spending itself shows that a political will, in this case to fight a war, can get an economy going again. We don’t need a war to have the political will to run an economy.
Les
83 - Lisa Solod Warren
handy, honey
a rescue is an okay idea, if absolutely necessary
but PLEASE don't tell me that no one can think of a better idea than writing Hank Paulson a blank check with no strings attached and no oversight.....
the American public are noc complete idiots.
That is the bottom line. THere are enough smart men and women out there (including some on this lst) who can and have and will and should be allowed to offer caveats, ideas, etc. to Paulson's nutty one shot shopping concept. THAT is the bottom line.
84 - bliffle
Les sez:
"...I would bet they're a lot smarter than you think they are. They can afford the best and brightest. The problem is what they are trying to solve is unsolvable."
Both wrong.
They are NOT smarter than is apparent. The evidence that is in front of us is that they were not smart enough to see this crisis coming.
Or were they? If they were smart enough, why did they lie about the state of the economy? Why did they keep making soothing sounds? Were they trying to deceive us? To what purpose? So they could creep out of town and leave the problem for the next administration?
there were plenty of people alarmed about the state of USA finances the last few years, were they dumber, or were they smarter? I've been concerned about the reckless USA finances since 2001, as have many other people. Wouldn't it make more sense to consider us smarter than Paulson? Or maybe more honest?
I just don't see any way anyone can defend P and Bs intelligence and veracity.
"They can afford the best and brightest."
But that's not whom they hire. They hire the most politically compliant. Oh, it may be a secondary requirement that they be bright enough to contrive rationales for policy, but they don't last long if they counter policy.
"The problem is what they are trying to solve is unsolvable."
I don't believe that for a moment. Besides being despairing and thus dooming us to hopelessness, it simply doesn't figure. We solve problems like this all the time. It's the nature of humans, of human society and of political entities to solve problems.
I've offered one solution, basically a variation on Bernankes helicopter problem (before he got slapped down by his bosses), and I'll offer some more.
Any number can play. I'm sure that other people out there can offer solutions, too.
The worst possible solution is to give some Mystery Man a big bunch of money and absolute power and hope that it all turns out well. It's a policy inspired by cowardice, and it never turns out well.
85 - Les Slater
Me: "The problem is what they are trying to solve is unsolvable."
Bliff: “I don't believe that for a moment. Besides being despairing and thus dooming us to hopelessness, it simply doesn't figure. We solve problems like this all the time. It's the nature of humans, of human society and of political entities to solve problems.”
Fundamentally, the ‘problem’ is solvable. In the above quote from me, the third-person, plural pronoun, ‘they’ refers to economic and political elite who are constrained, not only to work within, but toward the defense and maintenance of the capitalist system.
Most of us live within an intellectual pen surrounded by an electric fence. Whenever we think, or act, beyond the bounds of capitalism we get some sort of painful shock that tends to keep us corralled. This shock varies from semi-polite snickers to death.
The problem for the capitalist class and its hirelings is that there is no long term reversing the current economic crisis within the confines of capitalism itself.
Capitalism has gotten out of similar situations in the past. It resorts to the mass destruction of capital, in the form of plant, equipment and infrastructure. It then starts anew. The last time this happened was WWII. See my #25 in ‘In Defense of the Capitalist System’ to see how this has played out to the present. Any future word war would likely set back civilization to a state before there was a level of primitive capitalist accumulation to restart capitalism on a modern level.
“It's the nature of humans, of human society and of political entities to solve problems.”
Yes, when we recognize that the economic system that binds us must be removed, we will be able to make enormous progress.
As I have said many times on BC, ‘There is absolutely no excuse why a culturally and technologically advanced nation cannot provide all the necessities of life, comfort and security for all its population.” Dave agrees. He says that the U.S. made a moral decision not to do so.
That morality is succinctly encapsulated in Greenspan’s confession. That morality will be the death of us if we don’t reject it.
Les
86 - Lisa Solod Warren
Yes! Les, we do live in a pen, or a box.
And yes, it is a decision, but I would argue, it is an immoral, or rather, an ammoral, decision. NOT a moral one.