Bail-Out Basics

[Michael Tee]

Am I the only person here who doesn't know WTF is going down?  Is there some "Bail-Out Source Page" that I could turn to for answers to the following questions:

1.  Did the President submit a draft bill for anyone's consideration and if so, whose?  And when?  And what is its current status?

2.  Who or what is currently engaged in formulating bail-out terms?  A committee or committees of the House and/or Senate or a joint committee?  Which specific committees (if standing committees) are we talking about, and if not standing committees, is it one joint special committee or one House and one Senate Committee?  Who's in charge of the Committee(s)? 

3.  Am I correct in assuming that due to the urgency of the situation there is only one joint special committee?  If so, what is the basis of their current deliberations?  One draft document?  Several drafts?  Whose drafts?

4.  Has anyone succeeded in drafting a statement of agreed principles to be applied to the drafts under discussion and if so is it publicly available?

Above and beyond the specific questions above, how does it happen that respected analysts such as Krugman, Ron Paul and others are advocating a laissez-faire approach yet the administration and both candidates seem to be united in the view that urgent action is necessary?  Why has there been no public debate on the need for urgency or the desirability of a laissez-faire policy?

I don't know what are the proposals; who is for and who is against each of them ("who" in both the personal and the institutional sense;) which interests are served and which harmed by eack proposal; who is being left out of the picture and to whose benefit?  $700 billion and I don't know jack-shit about it.

On CNN this afternoon, I saw two Congressmen interviewed and one of them said his mail was running 98% against bail-out.  98 fucking percent is a lot of people.  How is a guy gonna vote for something that 98% oppose and he himself probably doesn't understand?  Isn't that in itself reason to slow down, review, examine and debate until the issues at least become clear?  Because rushing this through in these circumstances seems like a total mockery of the democratic process.  Almost like, when push came to shove, the desire to preserve the markets trumped the desire to preserve democracy.

[BT]

This is a good explanation of what the revitalization is about:

In testimony this week, Paulson and Bernanke have emphasized that the government will proceed carefully ? suggesting that not all the money is needed up front, in fact. But the administration and Federal Reserve officials argue that the psychological impact of the $700 billion commitment is important in itself, and Treasury will want to be sure it has access to the second $350 billion.

The cost debate illustrates just how nuanced the massive intervention will be. Paulson has often stumbled this week when trying to describe its intent, and the clearest voice has been Bernanke, a former college professor who casts the whole effort as an unprecedented experiment in ?price discovery? that will add not just capital but also precious knowledge to jump-start the credit markets.

With the bursting of the U.S. housing bubble, mortgage-related securities are caught in a vicious downward cycle, commanding only ?fire sale? prices, Bernanke says. The government purchases, through a series of novel auction mechanisms, will help the market value these assets, he says. And this could be the spark needed to get markets working and the economy?s engine turning over again.

This explanation is very different from the ?bailout? imagery that surrounds the debate. And the great challenge for both sides has been to find some path in between these two poles ? able to satisfy the anger voters feel toward Wall Street but also leaving enough room for Bernanke?s experiment to function.
One issue where this comes up is the question whether Treasury should demand warrants or options to hold stock in the companies ? a way, perhaps, to turn a profit for taxpayers in the future. Many Democrats argue that this is only fair given the risk the Treasury is assuming by buying up the bad debts. But Bernanke worries that it will be seen as a punitive step and discourage companies from participating ? and thereby reduce the competition in the market.

http://www.politico.com/news/stories/0908/13918_Page3.html

[Michael Tee]

Thanks, BT.  Fucking snake-pit, eh?

I smell at least one big rat.  Bipartisan deal (but maybe a bad one, I'll grant that much) is worked out but as McCain arrives on the scene, rogue conservative Republican legislators, with some sympathy from McCain, push a more populist plan, thereby "humiliating" Bush and Paulson ("See?  We're Republicans but we're NOT BUSH!")  McCain, labouring mightily among the conservative Republicans, gets them to compromise with the Bush administration plan and the Democrats, adding some of the populist protections demanded by the conservative Republicans.  The plan, previously on the brink of failure, is SAVED by McCain!

This only reinforces my earlier misgivings - - the urgency is manufactured, just like the "mushroom cloud" urgency of the WMD "crisis" - - and both the "bi-partisan" meetings AND McCain's intervention were strategies devised to rescue a failing Presidential campaign.  The best part comes when McCain single-handedly rides in to the rescue of the economy and "saves" the plan, by "convincing" Bush and Paulson to agree to some modifications insisted upon by the "maverick" Republican Congressmen.  Bush not only "stands up" to Bush but thereby proves again his "Maverick" trade-mark status.

This whole thing was a trap for Obama.

[BT]

It could go either way for Obama. The great noise machine could paint McCain as a self serving opportunist who pooched the deal, and then had to fix what he broke. Ignorant Schmuck that he is.

But let's put partisan bullshit aside for a minute.

There is lot of talk about rescuing Main Street too.

Primarily by either freezing foreclosures or restructuring mortgages so that homeowners are no longer upside down on their loans.

And this could be because they got into subprime loans, or were flippers who got in over their heads or refinanced regularly in effect using their house as a piggy bank.

Should these people be bailed out and in the process bail out the predatory lenders who enabled them?

[Xavier_Onassis]

Flippers should be left holding the bag and heartily screwed. They are just gamblers and serve no constructive purpose. All they do is to make houses more expensive for everyone.

Same thing for predatory lenders.

The difficulty is in separating these from people who are mere suckers.

[Knutey]

It could go either way for Obama. The great noise machine could paint McCain as a self serving opportunist who pooched the deal, and then had to fix what he broke. Ignorant Schmuck that he is.

But let's put partisan bullshit aside for a minute.

There is lot of talk about rescuing Main Street too.

Primarily by either freezing foreclosures or restructuring mortgages so that homeowners are no longer upside down on their loans.

And this could be because they got into subprime loans, or were flippers who got in over their heads or refinanced regularly in effect using their house as a piggy bank.

Should these people be bailed out and in the process bail out the predatory lenders who enabled them?

McSameastheBusgidiot is an ignorant schmuck equal or worse than the Bushidiot himself

The answer to your main question is a resounding yes. It is what should have been proposed in the first place and definitely what big O should say when he is by himself tonight on stage in MS.
Bush wanted a money grab for the big kids as he always does and was doomed to failure because no one with any brains believes him anymore. If we bail out the little folk we are starting from the bottom up which is infinitely better. It will accomplish the same with the banks but really help people and therefore the economy. I know your ilk will say "but we are bailing out a few speculators too. Well SFW. Not only was this country built on  speculation, the banks were the biggest speculators of all , but were doin it with their depositors money. At least most of the Fflippers " and outright speculators had some of their capital at risk. And they patriotically spent what money they made on other goodies just like their retarded Pres said to.