John1234

Now that this has been in Congress a few days and I have heard different opinions, I am very much undecided on how I feel about it.
Neither McCain or Obama seems very firm on it.
McCain threw out some ideas first.
But Obama seems to have more details to offer so far.

I am curious as to how you will react to various options, now that we know of several different views.

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dirtpoorchris

Maybe I would be 1% intrested in the bail outs if they didn't involve congress getting full power of the companies.
Then in a time of crisis (like a collapse of the economy due to the market getting flooded with make believe dollars, so that my single dollar isnt even worth a single patch of toilet paper) Bush oversees all decisions by congress...
Sounds like a NAZI bamboozlement right in front of our eyes.

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America. God is wearing black.

Willravel

Why not sell off the assets and liabilities as a package and then cut the debt for bondolders? The bailout seems like an invitation for more industries to start scratching at the doors of congress like a cat on my back stoop. Scat!

MC.no.spin

Can you elaborate - didn't understand.

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"The guy’s a phony. He has no experience, he has no record; he’s not nearly ready to be commander in chief."
Bill Clinton on Obama (from the book Game Change)

Curious George

I'm kind of torn on this issue. Personally, I'm opposed to bailouts of any kind. I'm opposed to most regulation as well. I think any person, or company, should have the freedom to assume as much risk as they want with the knowledge that, if things don't work out, they will pay the price without government assistance.

Furthermore, I worry that this type of bailout will begin to become the norm in times of trouble. It already has to some degree, and under a Republican administration no less (look out when Dems get in office). The slippery slope we've been riding into socialism since the 1930's is entering a steeper grade and, if we continue with this behavior, I fear it won't be long before we find ourselves in the same boat that most of Europe is in today.

On the other hand, it's been made clear that forcing these companies to take their medicine would have a devastating effect on not only our economy, but also the world economy. When our government has the ability to help stave off this devastation, why not do so? The cost to the taxpayer in the short term would be enormous, granted, but it should be remembered that this is less of a handout and more of an investment. The government is buying devalued paper and holding it until the market recovers, presumably resulting in a recovery of the value of that paper which would lead to a profit on the government's investment. Granted, there's risk involved, but the cost to the taxpayers in the end will be dramatically less than $700B (assuming we take any loss on our investment at all).

It seems like a smart decision, so I even though I'm opposed to it on principle, I respect the choice to do it. Of course, I'm left wondering what lesson we learn from all this... and if it's in our best interests to put off our plans for energy, health care, social security, etc., for possibly a decade or more, when these problems are so pressing, in order to avoid a little discomfort in the short term. This enormous outlaying of taxpayer funds will assuredly impact the next President's abilities to make good on most of their big campaign promises. I suppose time will tell.

SuperDem

There needs to be oversite other than the one man idea they have now. Truth is there are only about 12 congressmen who have the expertise to even approach the whole matter. Most of those are in the hearings now, and it doesn't look like Republicans or Democrats want to make a deal if the CEO's still get big bonuses. I guess they do hear the average voter loud and clear on this!

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Where the only sound is the falling snow on a seamless starless night...

ADK_Forever

Ya know, we can joke about this silly presidential election but, this **** is serious business! I wish, for once, these jackasses could recognize how important this is and do what is right... for the country. I think they should get a bunch of the most intelligent economists in a room and let them kick this around until they come up with a real and sensible solution.

But, they are all lining up on their special interest positions. The banks should not profit from this mess either. Granted, politicians on both sides going back years are also responsible for this mess. ****, Bush already has saddled our grandchildren with the costs of his 6 years of spending. This should not be laid on their laps! I wonder if a bailout is the right way to go, if it is absolutely necessary.

McCain and Obama need to come out and show us how they will lead in an emergency like this. Instead, both are pretty quiet while they stick their finger in the air taking the country's reactions to this.

Where are our strong, honorable leaders? Have we chased them all away?

Willravel

Sure, sorry.

The ideal outcome would be preserving ongoing business, ensuring that there's no loss to customers (and counterparties), wiping shareholder equity, and it can provide bondholders with at least a partial recovery with the proceeds. That would suggest only one possibility in my mind: sell the assets/liabilities as a package but ex the debt to bondholders.

I was reading about it earlier the other day here. It's really quite clever.

Curious George

As I understood Bernanke's testimony today, the problem is not that these companies will fail if they don't unload their mortgage backed securities. Most of them will probably continue to exist, but they will be far less able and willing to extend credit. Essentially, our credit market would dry up, making it incredibly difficult for everyday people to buy houses and cars, get personal loans, take out credit cards, etc. And, perhaps more importantly, though not on the surface, it would become incredibly difficult for businesses to get loans to expand their businesses or keep them afloat, and it would become tougher for entrepreneurs to get loans to start new businesses.

Also, as I understand it, the Treasury has tried to find other buyers for these mortgage backed securities (like finding Bank of American to take over Merrill, or Barclay's to take over Lehman Bros.), but there's been no market for them.

SuperDem

Yes, when we chose to look into their bedroom instead of their boardroom for the quality of leader they were.

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Burry my boots where the wind never stops, and the sky is big and white
Where the only sound is the falling snow on a seamless starless night...