It seems just about everyone recognizes that there is no “right plan.” We blew by the good solutions long ago. Also, everyone realizes there will be deep difficulties out in the real world. But we could still do better than what’s on offer now.

I’m still sending messages to my congressman (who voted yes) to encourage him (in vain, I’m sure) to change his vote in the likely event it comes up again tomorrow.

Also, does anyone know, or think, if this can be challenged on legal or constitutional grounds if it passes?

“…When money is tight, however, as it is likely to be for some time, withdrawing $700bn from the funding pool to support failed, past investments has a more serious effect on the economy, because capital flows are restricted by market illiquidity and investor trepidation…”

Anon @ 5:24:

“…There will be even more flight to quality as people rush to snap up the 700bn in treasuries, leaving 700bn less to invest where its needed…”

I agree with both comments -so-

If the bailout proceeds go to support those who made the failed past investments

And…

Those folks, including some of the bad guys, reinvest the bailout proceeds received by selling the crap assets in treasuries (the only safe alternative)

Then…

Taxpayers could conceivably wind up paying interest on the additional debt arising from the bailout to some of the very same bad guys who caused the problem in the first place.

Maybe that’s part of the plan.

This is a terrible, wasteful use of the taxpayers money and it will result in deeper, longer repression, er…., um I mean destruction, of the American economy.

But, the bankers are the wolves at the door, and they are demanding $700LARGE now, with further installments as needed.

To bend over, or not to bend over, THAT is the question.

You’ve got the failed bullshit capitalist holding a knife to your throat on the one hand, and some uppity disconnected keyboardists who don’t care squat about Mainstreet on the other.

The smart money goes with the knife-wielding tuxedo. The rest of you can play next game.

If there is a next game.

I say call them on it.
And be prepared to inject government-issue, debt-free capital to those guys that Carlos wants to represent.

That’s the only deal that will guarantee that anything positive happens on Main Street.

Paulson’s fiasco is not a government bailout.
And it’s not the full faith and credit of the government.

It’s a bailout by the taxpayers, and it is founded on the full faith and credit of the taxpayers.

If you want to provide financial aid to the hedge-funders, then Paulson is your man, and this $700 BIL is your plan.

If you want to make sure this shit never happens again, then either tune in to Seven Star Hand, or begin our national monetary transformation now.

My belief is that the government has weighed the options and decided “we will take Japan over 1930’s America”.

Since when? A drink in the morning is an alcoholics first line of defense. In Hi-Fi it’s “more margin, more margin”

http://www.break.com/dos-equis/hippies-cry-for-trees.html

One must understand the truth before any true solution is possible. There’s much more to this unfolding story than meets the eye. Be a little patient to understand it and then hold their feet to the fire!

Money Karma comes home to roost !!!

This is the long awaited opportunity to finally “kill the beast” and kick all the bums out, forever. Read what I have been saying for insights into another way to manage this civilization, without money and without evil cabals running this world. The keys to a “New Earth” are wisdom and cooperation, not the fears and follies of the past.

It will soon become painfully obvious, to even the most clueless, that it will be far easier to step away from the deceptions of the past (money, religion, and politics) and finally fix our civilization so it works for everyone, not just for a self-chosen and abominably greedy few. Why should humanity struggle and suffer any longer to repay massive debts and endure great debacles created by amazingly greedy and deceptive monetary and political leaders? Are you familiar with the ancient concept of a Jubilee? It’s time has come, and the power of the rich and arrogant is about to be blown away on the winds of long-overdue and irresistible change.

Here is Wisdom…

Peace…

>> Two problems with the thesis:

>> 1) Liquidity trap–Fed can toss liquidity at banks, banks can choose to hoard cash. Or, banks can extend credit and the consumer says no thanks.

You can always reflate. Let's take the example posted above: give each homeless person $250,000. And then promise 250k more when they are done with that. Or spend a trillion on filling in pot holes with another trillion to come to sweep the streets. The key is to induce inflation expectations — use it or lose it. That gets the money flowing.

>> 2) Even IF–and its a big IF the U.S Central bank can reflate, it will end up squeezing the U.S consumer.

The consumer should be squeezed. The consumer has been the problem in the US. What you want to do is protect the genuine wealth producers. And the debtors. Inflation helps the debtors (who will never be able to crawl out from under their load anyway) and the wealth producers will also benefit from a cheaper currency.

Apologies for the lack of tact — point well taken. For the record, I do agree with all of you that the guys steering the ship right now are self-interested buffons and this cluster f-ck of a situation should have been headed off years ago. And I also agree that this is bill is a crock, hastily conceived and evidence that, as Harry Reid put it: “We don’t kow what to do.” So we agree a lot more than it may first appear.

But what has struck me off the bat, and led me to post in a rather petulant way here, is my take that the discussion here is completely removed from the consequences on the ground. I mean, not even lip service is paid to the ramifications of choices made.

Compounding this is the sense here that if you could just get the “right plan” you could “fix the problem”. This seems like too much conceit by half, like saying if you had the right plan, you could have fixed Pets.com too. It’s too late for all of this. The damage has been done and a “better plan” plus $1.50 will get you a cup of coffee at this point.

The gov’t is set to throw massive amounts of paper money at this problem Expect a blizzard. Most of it will be ill-deployed but that’s just tough. You want to make sure that the wealth producing sectors – farms, factories, software shops – don’t get dragged down with the froth. And the only way to do that is by massive injections of indiscriminate liquidity.

Yes, the money will suffer, but is that not a better fate than Pets.com?

There are posters that seem to believe the way out of the debt deflation rests on inflating our way out.

Two problems with the thesis:

1) Liquidity trap–Fed can toss liquidity at banks, banks can choose to hoard cash. Or, banks can extend credit and the consumer says no thanks.

2) Even IF–and its a big IF the U.S Central bank can reflate, it will end up squeezing the U.S consumer. In a world of global labor arbitrage, U.S nominal wages are likely to tread below the rate of commodity inflation.

Before the credit bubble burst last year, we saw signs of wage inflation failing to keep up with rising commodity prices, healthcare costs, and tuition-related expenses.

America is in big trouble. The issues are STRUCTURAL as opposed to cyclical. There is no easy solution. Unfortunately, the consistent Greenspan put in place the last decade has led us to believe in the miracle of central bank intervention. So we keep thinking we can erase a twenty-year credit orgy with a few “rescue bills”, a few stimulus packages, a tax cut, or futher monetary easings.

What is ironic about the seizing of the credit markets? Everyone realizes that lax lending standards got us into this housing mess, yet we hear commentators proposing the U.S guvmint refinance all trouble mortgages at 5.5%.

What’s even more ironic? Most experts agree the American consumer has a god awful balance sheet and needs to retrench. Yet, “they” kick, yell, and scream when the banks decide to pull our HELOC’s, credit card limits and other consumer-related debt vehicles.

You don’t treat a hangover by serving the guy another drink.