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This bailout plan is the worst thing we could have done

Discussion in 'Sports and News' started by The Big Ragu, Sep 28, 2008.

  1. The Big Ragu

    The Big Ragu Moderator Staff Member

    EDIT: I though It put this on the politics board because it involves government. FHB, please move it, if you think it is appropriate. I hit the wrong button and posted to the wrong place.

    I have mostly stayed away from these threads. But this $700 billion bailout plan is the absolute worst thing for America. They have no clue about the unintended long-term consequences and only are looking for a short-term fix that wasn't even really necessary in the first place. This notion that no one can fail in private markets is a disease. A free market filters out businesses that are stupid and overleverage and make bad investments, and it punishes homeowners that take on bad loans on its own. You can't protect people from themselves. Unfortunately, now the U.S. government is going to take what would have been an 18-month blip--a recession *gasp, we can't let that happen--even though you COULDN'T STOP IT. WE MADE OUR BEDS!* and turn it into a decade-long depression. I am so depressed by this. And then they will blame it on everything but the fact that government does not belong in private equity markets and they did the absolute worst thing.

    This financial crisis is a year old. It really didn't hit a crisis point until the government stepped in and bailed out Bear Stearns. Now all this private capital is sitting on the sidelines and it isn't getting put into these firms in the form of liquidity. It isn't because of a crisis or uncertainty. It's because government has now gone from a referee to an active participant in our PRIVATE markets. This is so fucking UnAmerican. Our country was founded on principles antithetical to this. Karl Marx is rejoicing somewhere. And it is the worst thing for us in the long run. It also is creating world turmoil. The world is spooked by all of this. The one thing they could always count on is that American markets floated in an open atmosphere. Now they have to worry about the shifting whims of Washington D.C. are going to influence the world economy. It's a mess and it is going to cause foreigner investors to avoid us out of fear.

    If you can prove fraud, or anyone putting forth false statements out to swindle investors in any company that sunk itself, press charges. Short of that, though, capitalism doesn't mean everyone is a winner. NO SYSTEM is going to make everyone a winner, and trying to manage an economy to bail out people who make bad investments or bad decisions stifles that economy and creates Eastern Europe in the 80s. What capitalism does is it creates something that is efficient. It filters out the bad actors and the losers. And it gives us the best mix of goods and services if you allow the market to play itself out, and consumers can benefit from LACK OF INTERFERENCE -- the consumers who make sound financial and purchasing and investing decisions can be rewarded. You get a level playing field and people who are smart are rewarded. What is wrong with that?

    These guys are claiming that "a failure to deal with this crisis would have devastating effects on average Americans." Sorry, guys, we passed that milestone a year ago. The mess you are creating is going to have much worse long-term effects on the average American, and people are too stupid to see it. Frankly, people who bought homes they couldn't afford made their bed just as much as Lehman Brothers did. But a bunch of Senators and Congressman got to puff out their chests and act like Santa Claus -- with our tax payer dollars. And we will now pay for it for at least the next decade. And by the time people realize what a bad idea this was, we will be paying for it in the form of malaise.

    This is going to be an absolute disaster, and these grandstanding lawmakers who are boasting about saving the day, are creating a huge, near trillion dollar nightmare for us. Whoever gets elected president -- Obama or McCain -- is absolutely screwed now too. Good luck spending all that money you want to, Obama. Good luck cutting taxes, McCain. A pen and some line-item vetoes is not going to cut it. Anyone with a checkbook understands this. You don't bankroll the banking system, in addition to the gobs of other money you are already spending in runaway Washington D.C., and do it in an environment of decreasing tax revenues because we are in a recession. Anyone doing a household budget understands this. When you have massive debt (oh, $700 billion), a budget that you already can't afford based on entitlement programs that are structured for failure, and you don't bring in enough income, you have a disaster on your hands. I don't care if Harry Potter is president. No spell can figure that one out. There is no Santa Claus, but people don't want to hear it. Eventually, hands will be tied, because the treasury will be stretched, and we will have to raise taxes and cut government services drastically--or else we will come up with some other plan that doesn't face reality and fucks us for the next century.

    And our economy will be mired in a mess worse than it would have been if we had just let the free market filter out the bad actors on its own and absorb the consequences of some really bad decisions. Private equity would have stepped in a long time ago, and our "crisis" would have been serious, but not the scare that has been drummed into people, if the government hadn't spooked everyone by sticking its nose in. Warren Buffett has been sitting on the sidelines, as have several others, ready to make loans to boost liquidity. They see vulture opportunities. And they have held back because of the uncertainty created by the Senate and House.

    I am disgusted by all of this, as you can tell. We just took a hard situation in which people were doomed to hurt by a recession or depression, and ensured that it will be prolonged and worse than it would have been. Fucking politicians.
  2. Ben_Hecht

    Ben_Hecht Active Member

    Believe you to be broadly-correct, especially graf #6. The plan is offensive, on multiple levels -- not as offensive as Hank's crony-oriented nonsense, but plenty bad enough.

    But public rationalizaton by the GOP clown show which got us into this fix is that without making some significant gesture in this direction, the "foreign credit markets" (i. e., Big Red Confucius) will turn down the spigot.
  3. poindexter

    poindexter Well-Known Member

    Bailout is a bad idea.
  4. Piotr Rasputin

    Piotr Rasputin New Member

    Budgetus patronus . . . LEVIOSA!!!!!!!!!

    Seriously, I agree with much of what you said. It's as if our lawmakers saw the subprime world collapsing a year ago, and said "Hmm, neat." And now our banks are going down, and they wanted to ride in on the shiny horses and save the day.

    It just doesn't work that way. We're pretty much screwed.
  5. Guy_Incognito

    Guy_Incognito Well-Known Member

    I'm no expert, and I thought most of this until this weekend when I spoke to two friends who are right smack in the middle of all this, and they say that the bailout could end up being a great deal for the US, far better than purchasing equity (which is what I had thought was best), depending on what price they bought it at - if they by the debt at 20% or 50% of par, they'll likely come out ahead. I said, but who will negotiate it? They said, if it's Paulson, he will get a steal. I asked but the deal he asked for was absurd - a blank check. They said that he knew it wouldn't pass, but it was an opening bid so off the charts, it frames the discussion favorably to his position. And he apparently did it at the last second he could have - they said Morgan Stanley and another bank (I forgot) were on the verge of bankruptcy, not because there was anything fundamentally wrong with them, but the stock price was sinking so low. They think Paulson is THAT good.

    I doubt I can defend any of this from your questions - I wrote everything I heard, and understand, but honestly I found it a bit comforting.
  6. suburbia

    suburbia Active Member

    Pretty much every significant decision made by politicians in this country (especially of the fiscal variety) is short-term oriented only. Most voters don't care about or don't understand the long term, big picture ramifications of tax cuts, $700 billion bailouts, etc. They don't care or understand that those things are either going to require cutting services that they also want or racking up debt that their children and grandchildren will have to pay for.

    They just go for whatever is going to put the most money in their pocket and give them the most peace of mind RIGHT NOW. That's why cutting taxes or vowing to cut taxes will raise your approval rating while raising taxes or even hinting you might will sink your approval rating.

    The long-term consequences of those expenditures? That's a problem for another day and for someone else to deal with.
  7. Guy_Incognito

    Guy_Incognito Well-Known Member

    While you well be right most of the time, this is one of the instances where you do have to get through the short term.
  8. Ben_Hecht

    Ben_Hecht Active Member

    Having already observed that Paulson knew his opening gambit was wholly unacceptable -- but useful, for bargaining purposes -- I understand.
    Good background; thanks for sharing.
  9. Michael_ Gee

    Michael_ Gee Well-Known Member

    Nobody likes this idea in principle. But there is a conviction in the financial sector that we've gone past the time for worrying about principle. Even if these guys are panicked, they unfortunately have the ability to turn their panic into action.
  10. hondo

    hondo Well-Known Member

    The clown show was all Democratic...forcing lenders to shovel money to unqualified people in the form of ARMs, with no money down, because someone thought home ownership was supposed to be a Constitutional right. When the deadbeats defaulted, the mortgage crisis was born.
  11. Pete Incaviglia

    Pete Incaviglia Active Member


    Excellent post. Truly excellent. My thoughts exactly.
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