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12 Responses

  1. laura
    laura September 28, 2008 at 3:58 pm |

    Fuck you Democrats! Why don’t you grow a pair–so much for caring about the people. Shit, man, this makes me want to vote Green. I don’t really consider myself all that liberal, but this stuff makes me realize how far to the left I am–is social justice and a little accountability on the part of our financial leaders really asking that much?

  2. Manju
    Manju September 28, 2008 at 4:17 pm |

    Well, here’s a possible best case sceanrio:

    Warren Buffet is right (he said he’d purchase these securities if he had the $$, ie 700bill) and the securities are undervalued.

    One key to understanding this crises, is–unlike the Internet scandals or enron and wcom–insitutions did not try to pass these securities off to unsuspecting individual investors. Nor did CEOs sell their shares in their companies knowing they were about to become worthless. James Cayne of Bear Sterns, for example, went down with the ship. Say what you will about him, but he’s not Ken Lay.

    What does this mean? This tells me the most sophisticated investors actually believed in these securities, but some black swan event coupled with brutal accounting rules (mark to market) made the market irrational by valuing them close to zero. They simply didn’t have time to hold onto these securities until they recovered.

    There’s precedent for this: the Fed orchestrated bailout of Long Term Capital Management after Russia defaulted on her (his) debt. Those derivatives were also valued close to zero, but it turned out the financial models of the Hedge Fund were right, just the fund, because it was leveraged, couldn’t hold onto the securities until the models came to fruition.

    So we get to pick them up for 700bill, 65cents on the dollar, and they return to par as soon as housing prices recover. The next president then has a huge profit with which he can shore up social security, a pyramid scheme representing the next great financial crises.

    Ironically, this may save American socialism and benefit the taxpayers who are being asked to subsidize everyone else.

  3. Kristen
    Kristen September 28, 2008 at 4:23 pm |

    Okay, here’s the long and short of it.

    If Wall Street doesn’t get this bail out then a lot of financial intermediaries and banks are going to go bankrupt.

    Banks and financial intermediaries going bankrupt means that there is no credit. People and corporations cannot take out loans.

    If corporations can’t take out loans, working americans get laid off.

    People with money to buy a house can’t get a mortgage so real estate prices tank even more, causing more foreclosures.

    I know this seems really pie in the sky sometimes…but the bail out will help Main Street a great deal. It’s not my preferred method, but lets not pretend that they aren’t trying to do the right thin.

  4. Radfem
    Radfem September 28, 2008 at 4:52 pm |

    So the Democrats capitulate? Big shock. And is it really about doing the right thing, or did this come about because of bad decisions from both sides of the aisle, decisions made to help out the wealthier minorities of both political parties?

    Crises happen often because they are allowed to or they’re ignored because it’s not their friends that are being hurt. This crisis hurt poorer people before it even became “the crisis”.

    Hey, laura speaking of voting green, This posting appeared on Amp’s blog about Cynthia McKinney and her ideas of what to do about the financial crisis. Whether you agree with it or not or all of it or some of it or not, it will of course never be discussed b/c nothing outside the main parties exists.

  5. Radfem
    Radfem September 28, 2008 at 5:01 pm |

    Actually, crisis is only a partially correct term. A “crisis” implies that it came suddenly out of the blue. No, this is more like a tall house of cards that’s coming down and as we all know, it takes quite a bit of time and energy to build that house of cards.

  6. K
    K September 28, 2008 at 6:50 pm |

    No Bailout! Cut the federal budget in half.

  7. Mike
    Mike September 28, 2008 at 10:24 pm |

    …lets not pretend that they aren’t trying to do the right thing.

    Kristin: The fact that what they are doing will have positive effects on working people is not sufficient to conclude that “they” are trying to do “the right thing.” The motivation of some individual legislators and Executive Branch members may in fact be to help everyday Americans, but there’s a great many reasons to conclude that “they” – i.e., Congress and the Bush Administration – are trying primarily to help, support and enrich “their” wealthy pals, including the ones who caused the problems.

  8. AlexanderBuinov
    AlexanderBuinov September 28, 2008 at 11:11 pm |


    Let’s assume the bailout falls apart by the time the Senate votes on Wednesday.
    Then Congress goes away until after the elections. Will one of the no-bailout proponents care to describe what life is going to be like for the next six months?
    Try to be more creative than, “there really won’t be much difference”!

  9. jed
    jed September 28, 2008 at 11:31 pm |

    The next president then has a huge profit with which he can shore up social security…

    I find Manju’s comment to be fairly fairly accurate except possibly this. The earliest that those profits are likely to be realized is 2014.

    The questions now are what existing federal programs will be slashed to finance this buyout, will taxes be raised, and which new programs will have to wait. One other question I have: Is the US financially able to continue its occupation of Iraq?

  10. Kristen
    Kristen September 29, 2008 at 9:47 am |


    I think you and I have a fundamental disagreement about the goodness of people. :)

    How about I rephrase as “lets on pretend that this isn’t necessary for working people.”

  11. Kristen
    Kristen September 29, 2008 at 9:59 am |

    Typing before coffee = bad.

    “let’s not pretend”


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