Bailout talks break down

[jdobbin]

http://www.msnbc.msn.com/id/26884523/

A Republican rebellion stalled government efforts Thursday to avoid economic meltdown, a chaotic turnaround that disrupted the choreography of an extraordinary White House meeting meant to show joint resolve from the president, the political parties and the presidential candidates.

After six days of intensive talks on the $700 billion financial industry bailout proposed by the Bush administration, with Wall Street tottering and presidential politics intruding six weeks before the election, there was more confusion than clarity.

Is it no wonder that McCain is adrift in some polls? Yeesh.

What a mess with bank after bank tottering.

Edited September 26, 2008 by jdobbin

[the janitor]

http://www.msnbc.msn.com/id/26884523/

Is it no wonder that McCain is adrift in some polls?

I wouldn't say he's exactly adrift. Back in '60, Kennedy was behind Nixon 50% to 44% right up until polling day.

The irony is that right now the meltdown is creating a more politically pressing issue than even the election. Americans can't get past partisanship even when their country is going down the pooper.

Last night at work I was unclogging this one toilet that had a three-coiler stuck in it. Very hard not to imagine the words "America! America!" as it finally succumbed.

Edited September 26, 2008 by the janitor

[August1991]

From link above:

Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee, emerged from the White House meeting to say the announced agreement "is obviously no agreement." McCain's campaign issued a statement saying, "the plan that has been put forth by the administration does not enjoy the confidence of the American people as it will not protect the taxpayers and will sacrifice Main Street in favor of Wall Street." The White House, too, acknowledged there was no deal, only progress.

msnbc

You gotta love America. Americans push the envelope to see where it will go. Faced with a banking crisis, Americans want more.

Among the six billion people in the world, there are some who want to try something new and succeed. Where do they go? America.

Edited September 26, 2008 by August1991

[Oleg Bach]

Talks will break down because there are two camps - The established rich that have a sense of entitlement that is blinding...and the other camp - those that envy the super super rich and want to be them - sorry there is a third camp THE REALISTS THAT HAVE TRUE SOCIAL RESPONSIBLITY. The last are in the weakest position. This morning I got a small lecture from an old investment banker that has observed and participated in the system for the last 30 years - He as an old conservative old school non-neo-con said this of the high ranking executives that ratchet up the profits artifically in order to acquire a huge bonus......"LAZY STUPID AND GREEDY" _ that sums up the problem.

[Liam]

Talks will break down because there are two camps - The established rich that have a sense of entitlement that is blinding...and the other camp - those that envy the super super rich and want to be them - sorry there is a third camp THE REALISTS THAT HAVE TRUE SOCIAL RESPONSIBLITY. The last are in the weakest position. This morning I got a small lecture from an old investment banker that has observed and participated in the system for the last 30 years - He as an old conservative old school non-neo-con said this of the high ranking executives that ratchet up the profits artifically in order to acquire a huge bonus......"LAZY STUPID AND GREEDY" _ that sums up the problem.

The Congressional Democrats have enough votes to pass the $700B plan, having majorities in both houses, but they want more Republicans on board to give them cover. They've got roughly 40 of 49 GOP Senators who said they were ready to sign on to the original plan.

My concern is whether they should pass the $700B plan as is and I think I am leaning toward No. Does anyone know why no one has seriously proposed a Resolution Trust-type fix? It worked for the failed S&L's, does someone know why it wouldn't work here?

I'd prefer to see the Congress and WH agree to a short-term $200B infusion to keep credit markets going while engaging in serious, marathon sessions to establish a Resolution Trust Corp II. Unused funds from that $200B pool would be then transferred to the RTC II in addition to whatever added funding is determined to be necessary to keep the markets (particularly the credit market) solvent.

[bush_cheney2004]

....My concern is whether they should pass the $700B plan as is and I think I am leaning toward No. Does anyone know why no one has seriously proposed a Resolution Trust-type fix? It worked for the failed S&L's, does someone know why it wouldn't work here?

It has been proposed but not embraced because of the false urgency of imminent collapse. The RTC liquidated about $400 billion in mostly real estate and mortgage assets, but it took years.

I think the House Republican plans sucks too, but I admire them for standing tall if even for the wrong reasons.

The "democratization" of credit and financial choices has een a good thing since the bad old days of the 1970's, but it got hijacked by business (as usual). Time for them to get a haircut.

[peter_puck]

The "democratization" of credit and financial choices has een a good thing since the bad old days of the 1970's, but it got hijacked by business (as usual). Time for them to get a haircut.

The people responsible aren't getting hair cuts. They are sipping martinis in Florida. The taxpayer is getting a haircut.

How many executives and CEO's have gone to jail over this? How many have gotten golden parachutes ? How many people with little income who lied to get a $500 000 house hoping to flip it have gone to jail. How many sleazy mortgage brokers who lied to their clients have gone to jail ?

The bottom line is that out there right now, some poor stiff who worked his entire life and lost his life savings in this mess is giving himself a haircut because he can't afford a barber.

[bush_cheney2004]

The people responsible aren't getting hair cuts. They are sipping martinis in Florida. The taxpayer is getting a haircut.

How many executives and CEO's have gone to jail over this? How many have gotten golden parachutes ? How many people with little income who lied to get a $500 000 house hoping to flip it have gone to jail. How many sleazy mortgage brokers who lied to their clients have gone to jail ?

Don't confuse illegal activity with greed inspired (but perfectly legal) decisions.

The bottom line is that out there right now, some poor stiff who worked his entire life and lost his life savings in this mess is giving himself a haircut because he can't afford a barber.

Right...the same rube who was perfectly happy to brag about his $1,000,000 Enron driven portfolio when the price was high. Play the victim...be a victim.

[peter_puck]

Right...the same rube who was perfectly happy to brag about his $1,000,000 Enron driven portfolio when the price was high. Play the victim...be a victim.

No, not that rube. He deserved what he got. With the Enron/accounting debacles, it was the speculator's that got nailed. This time we have two classes of people. You have the high school drop out who thought he could become a millionaire by lying on mortgage applications and flipping houses. He filed for bankruptcy (he had no assets to begin with) and will be on to the next great thing in a few years.

The other person caught up in this is the guy who is 70 years old and retired. He worked all his life and saved his money. He needed the money to retire on, so taking his brokers advise he bought save, conservative investments. He did not want an Enron driven portfolio, all he wanted was a safe single digit return.

The bottom line is the guy who did the wrong this has been made whole by the bankruptcy process, while the poor guy who did the right thing got fleeced. Can you say "moral hazzard"?

[bush_cheney2004]

The other person caught up in this is the guy who is 70 years old and retired. He worked all his life and saved his money. He needed the money to retire on, so taking his brokers advise he bought save, conservative investments. He did not want an Enron driven portfolio, all he wanted was a safe single digit return.

He is still a rube...and didn't understand income vs. growth investments. Only a 70 year old idiot would have exposed all or even a majority of his/her portfolio to higher risk. Last I checked, bond and money market choices are still available...not sexy enough...hih?

The bottom line is the guy who did the wrong this has been made whole by the bankruptcy process, while the poor guy who did the right thing got fleeced. Can you say "moral hazzard"?

The old geezer can declare bankruptcy too. No whining allowed.

[peter_puck]

He is still a rube...and didn't understand income vs. growth investments. Only a 70 year old idiot would have exposed all or even a majority of his/her portfolio to higher risk. Last I checked, bond and money market choices are still available...not sexy enough...hih?

Problem is that these things were never sold as "high risk". If nobody had lied, they would have not been high risk.

I don't think any "geezer" was 100% exposed to this mess, but these types of "safe" investments were part of many low risk mutual funds.

The deal was low return, low risk. What they ended up with was low yield/high risk.

The old geezer can declare bankruptcy too. No whining allowed.

What good would bankruptcy do for this guy ? He paid his bills all his life. He saved up for a comfortable retirement and his money went up the nose of some Wall Street banker.

The banker lied and got rich. The no-brain amateur real estate speculator lied and got rich. The poor salt-of-the-earth plumber for Cleveland got screwed. So much for those Horatio Alger stories we read to kids.

[bush_cheney2004]

Problem is that these things were never sold as "high risk". If nobody had lied, they would have not been high risk.

I don't think any "geezer" was 100% exposed to this mess, but these types of "safe" investments were part of many low risk mutual funds.

The deal was low return, low risk. What they ended up with was low yield/high risk.

Tough titty....lot's smarter retired folk didn't get burned at all because they new that any risk means "risk". You pays your money and you takes your chances with anything but government insured products, and even then only up to $100,000 for each account. It's not rocket science.

What good would bankruptcy do for this guy ? He paid his bills all his life. He saved up for a comfortable retirement and his money went up the nose of some Wall Street banker.

He pissed it away trying to get a slightly higher return....boo hoo. Coulda bought munis instead.....or T-bills....hell, even money market would have preserved most of his principal except in the rarest of cases.

The banker lied and got rich. The no-brain amateur real estate speculator lied and got rich. The poor salt-of-the-earth plumber for Cleveland got screwed. So much for those Horatio Alger stories we read to kids.

Horatio Alger didn't live in Canada, and his stories were not about achieving extreme wealth. Our old geezer still has his social security, pension, home equity, and lower value investments. Do you think he should get rich too just for guessing right instead of guessing wrong?

[peter_puck]

Horatio Alger didn't live in Canada, and his stories were not about achieving extreme wealth. Our old geezer still has his social security, pension, home equity, and lower value investments. Do you think he should get rich too just for guessing right instead of guessing wrong?

Extreme wealth? Having a little bit more than your Social Security (aka the other shoe) and pension is not extreme wealth.

Capitalism, while the best system developed so far only works in a transparent environment. It is based on a certain amount of trust. If I can't trust a balance sheet, I am not going to buy a stock or a bond. Without investors, you cannot have large companies.

If I can't trust my money is safe in a bank, I won't put it there. Without money in banks, the economy would shrink dramatically. If I am unsure if I am going to get paid, I am not going to work.

Lets say you go to your broker tomorrow and find out that what they told you was a money market fund earning 1 % was really a Nigerian mutual fund that earned a max of 1%. The money disappeared and the broker went broke after paying everyone a $100 000 bonus to each employee and $1 000 000 to the owner (because the Nigerians paid them a 40% commission to invest ). Would you not be pissed ? Would you be shy about investing knowing you hard earned dollars

You got something different than what you were told you were buying. Somewhere along the line so did the plumber.

[bush_cheney2004]

Lets say you go to your broker tomorrow and find out that what they told you was a money market fund earning 1 % was really a Nigerian mutual fund that earned a max of 1%. The money disappeared and the broker went broke after paying everyone a $100 000 bonus to each employee and $1 000 000 to the owner (because the Nigerians paid them a 40% commission to invest ). Would you not be pissed ? Would you be shy about investing knowing you hard earned dollars

They can be as "pissed" as you wish....and continue to be stupid. Like I said, it is not rocket science...more gain means more risk, and each bonafide investment comes with a prospectus, industry rating, performance history, etc., etc. When I read that the investment is not insured (e.g. FDIC) and all principal and interest can be lost, I figure they are not kidding.

You got something different than what you were told you were buying. Somewhere along the line so did the plumber.

Haven't you ever purchased a used car???