Cilogy

I've searched far and wide for an explanation for the bailout, since I just got back from vacation, just hearing about this today. Everyone I've asked has either said "**** those Dems or **** those Reps," or they use wordy stories about the problem rooting from 2004 and all this unnecessary crap.

Here's how I saw it: The government would buy the assets of troubled banks, for a discount, thus getting them back on their feet. The billions of dollars would be paid back in full by bank, including the subtracted discount, so the govt would make profit. So that would be mean when the billions are payed back it would not affect taxpayers positively or negatively. Is this correct?

I read an article today on CNN claiming that Obama blasted Congress for not passing the bill. Before Sunday it appeared that he was against it, is this true? Of course, I guess I just don't understand the whole bailout well enough.


I'm pretty liberal, is there necessarily a Rep and Dem position on this bailout rejection? I personally feel the banks made a mistake and should pay for it themselves, so I'm against the bailout.

Is this how I should be feeling, being an Obama supporter? Please help me understand.

If this was already addressed, and if I shouldn't have made a separate thread, I apologize.

Ethereal

The cause and supposed necessity of the bailouts have been discussed at great length here in the economics forum. A perusal of past threads should be able to provide you with mutliple explainations as to why this occured and why or why not the bailout is necessary. If you're looking for a simple answer then you might as well give up now because it doesn't exist. If someone tries to give a simple answer then their explaination is most likely innaccurate or fails to communicate the scope and depth of the issue. In order to understand this situation at the very least you'll need a cursory understanding of basic economics and the willingness to delve into complex policy issues.

Here are some threads which attempt to decipher this economic riddle by providing a wealth of contrasting viewpoints...

http://www.debatepolitics.com/econom...-ron-paul.html (A statement from Ron Paul)

http://www.debatepolitics.com/econom...omic-ride.html (Bailouts will lead to rough economic ride)

http://www.debatepolitics.com/econom...ge-beyond.html (Some Implications of the Financial Rescue Package and Beyond)

http://www.debatepolitics.com/econom...situation.html (Are low capital gains and investment tax rates a factor in the financial situation?)

http://www.debatepolitics.com/econom...chris-cox.html (My investigation revels The REAL culprit for the crisis: SEC Chairman Chris Cox)

jujuman13

Quote(I personally feel the banks made a mistake and should pay for it themselves, so I'm against the bailout.)

I too feel that those who caused this mess should deal with it.
I am most vehemently against any Taxpayer funded payout, I already believe that we live in an economy where the Bankers and Wall Street are bunch of thieves.
What I am unclear about is this:
In a law abiding country (which is claimed we in the US are) we punish thieves, we do not reward them for stealing.
Perhaps I am wrong, perhaps this is a far too simplistic view of how society should be?
I put the question mark at the end of that sentence because I am always willing to learn and be taught.
Should Taxpayer money be provided to overcome the mess these thieves have caused, then there must be some kind of guarantee given that that Taxpayer money will be returned with some interest.
I would suggest that the Taxpayer money be used to purchase Banking shares, that way the Banks get the money they claim to need, the Government is able to repay the Taxpayer for the money loaned.
Let the banks then sort the problem out.
The Gov. can with it's shareholding offer an oversight on the board of directors of the relevant Financial Institutions in which it has a shareholding.

Cilogy

Ok thanks to both of you.

Mach

So true, if we could just make that a minority rather than the majority we might have a good democracy.

Two different issues have presented themselves:
An attempt to fix the economy to avoid collapse - good.
Public perceives this as a corporate bailout (doh), - bad

It's not actually a corporate bailout the way it's structured, at least from what I can tell. The corporate execs are not really at risk in "real" terms.

The public has decided to **** itself and make a stand against the Bush administration when they actually stand to gain from his rampant spending. They didn't have a clue when we spent billions and wasted lives in a war in Iraq, they rolled over. Now they stand up to him, when it's their jobs that will be lost. The elites won't lose their job, nor do they need a job, they can early retire today.

It's not about saving banks, it's about fixing the credit market, which if it freezes, will force our economy to reset...i.e. tank.
If you want to destroy the economy to send a message to some rich guys and gals who already have enough to retire on...OK, but I don't see the logic. The only lesson they will learn is that apparently if the public is that dumb, then every decision they made to profit from the masses was apparently a good decision.

Obama, like McCain is trying to get elected.
McCain said he'd go lead the congress in getting it passed. Unfortunately for him, he failed. He'll claim credit once it does pass though, ironically.
Obama agreed the bailout was needed, when the public turned en masse on it, he then sided with the public, and he too will probably later agree with the bailout claiming the provisions that were added were good enough. That's my guess.

-Mach

__________________
Let teachers and priests and philosophers brood over questions of reality and illusion. I know this: if life is an illusion, then I am no less an illusion, and being thus, the illusion is real to me. I live, I burn with life, I love, I slay, and I am content.- Conan

hackster

No Bail Out!

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Cilogy

You know Mach, you answered my questions very nicely, thank you very much.

Though I have one more, which might be a little too general, I'm not sure.

However idiotic this sounds, I don't think I genuinely believe that the bailout was a bad idea. In fact I'm not sure what to believe. I feel like I have settled because of maybe my liberal bias or whatever.

Being a liberal and also siding with the Dems on many issues, I feel like I'm cheating myself by thinking the bailout is a bad idea. I also have a little bit of suspicion that the bailout would have helped, so I'm quite divided on this issue.

So my question is, what position (for or against the bailout) is necessarily the "correct" position?

Ethereal

This is why I provided you with the numerous links in my previous post. Any answer you recieve will be inherently biased one way or the other. For instance, I disagree with everything Mach said in regards to the bailout as I'm sure do several others. The point being that you need to decide for yourself what caused this and whether or not such a situation merits a bailout. In order to do this you must delve deeply into matters of some complexity but it will be very informative. If you're simply looking for someone to spoon-feed you answers then you should simply watch the news. Check the links, read the differing opinions, and make your own determination.

This should get you started, some people think the government caused this problem and that further intervention will lead to long-term economic turmoil, whereas others believe it was due to a lack of regulation and that the bailout is necessary to avert economic disaster. I'm of the former opinion, Mach is of the latter (I assume). You can take it from there.

ARealConservative

The more complex an economy is, the more we should be worried with people that think they have managed solutions to make it run more efficient.

Often times we hear the opposite. This is the 21st century....or it's a global economy now, as justification to implement far reaching solutions to the economy and not allow free market dynamics to run its course.

If an economy is actually reliant on mob rule to make the right decisions, we should all have problems sleeping at night.

Communism fails because the economy is too fluid and complex to manage. Mob rule will fail for the same reason.

So I reject that bailouts are anything more then bandaids to prop up a failing system. The only concern I have is what happens when the bandaid fails to prevent the bleeding. What will the mob do next out of panic?

Mach

Welcome to the forums by the way!

Good question. I think we all, me included, at some point, or even now, rely on the media too much. Ultimately the media are just very large for-profit corporations. OK, not the best source of unbiased accounting is it? Good conclusions take, unfortunately. Most americans are busy with work and family and don't have time to solve their own goals/problems AND those of the nation. But we have to do some small part I think, rather than rely on the media. No we'll never have access to all information. Yes it's bad to conclude that because we don't, we can't spend a little time on it ourselves.

The buyout has changed and will continue to change. As it was proposed, it was bad. It was $700B with no strings attached basically, and they wanted fast approval. That was absurd, but they probably knew that. It may be more efficient for them to put what they want, and let congress tack on what they want. So, congress wanted these things:

1. More oversight...i.e. we check what they spend it on and can take action if they do something bad.
2. Some help not only for Wall Street, but also for home owners that got those bad loans, so that they don't necessarliy end up foreclosing (leniency)
3. Caps on executive pay for the corporations we help out significantly.

If you're in business, ever proposal comes with terms, and no terms are off the table. These are all valid terms. Do you agree *enough* with them to allow the bill to pass? I believe all three have benefits to the market and to us, and I'd pass that.

I think my reasoning is as follows:
1. The original bill should not have passed.
2. The revise bill should have been passed.
3. Being put into the position to be compelled to pass such a bill IS bad. We need to ensure large profit-seeking corporations cannot hold us hostage again. Letting the get that sort of power is what we feel is bad.

They are ransoming our market, which they hold hostage, to us. You're damn right that is bad, and we should HATE paying the ransom. But we pay it, save the market, and then go after the hostage-takers....

And don't read long links from other posters. Read what they wrote, and research independantly yourself in the most unbiased sources you can find. If they post a fact, sure you can check the link, but the bulk of a debate should be done in ones own words, else, they are just referring you to some OTHER idiots opinions. Read on the Great Depression if you want to know why we think it's a big problem (the debt freezing), and why lack of regulation was involved then. Try to find a historical account, and not an idealogically biased one.

-Mach