Anyone else celebrating our small success? BAILOUT FAILS IN HOUSE.

Bongulator said:

If they don't pass this bailout, and you work for someone else (a company, a boss, whatever), then your job is in great jeopardy. Plan accordingly.

I was thinking, you know who is going to do fine no matter what? If we don't do something to alleviate the pain by reigniting the credit markets, and everything goes to hell, no jobs, no credit for homes or cars or municipal improvements or student loans or anything, one group that will absolutely be fine are the Amish. I shit you not. They don't need utilities, they build their own homes and barns and stuff, they're not dependent on credit, they have their own transportation that doesn't require gas, and they grow their own food.

Basically, if we pass this bill, we'll still suffer a recession. If we don't, it may be WAY worse than that. The ripple effects are already beginning, and spreading. As businesses shut down, people lose their jobs. Unemployment grows, and the people who WERE paying their mortgage, now suddenly out of a job, default on theirs, making things worse. As more people are unemployed, there is less need for as many businesses, so more go out of business, dumping more people on the street. And on and on it could go, a vicious cycle.

This has happened before in Sweden and Japan. Both countries, like ours, had no real choice but to let the government step in and bail things out with taxpayer dollars. But the results were completely different.

In Sweden, they acted QUICKLY, nationalized a few banks, bought up defaulted mortgages. Then over five years they sold all that stuff as their economy recovered. In the end, Sweden's taxpayers kicked ass on their bailout investment, and they are roaring along just fine now. They still have part of one bank left to sell, and they're asking about $45 billion for it. The total cost of their bailout was $10 billion. They made huge profit on their bailout.

Japan waited much longer to react to the problem. The result of being slow to do anything caused them to drop into a huge recession that lasted most of a decade. They call it 'the lost 90s' or 'the lost decade'. Their cost was $170-ish billion, and they didn't get much of that back. Even today, Japan's economy STILL hasn't recovered to 1994 levels.

So, the question isn't, do we have to do something. Of course we do. If we don't, we're basically laying down in a grave and helping shovel dirt over ourselves. The question is which model do we follow: Sweden's (act quickly) or Japan's (act slowly). How quickly we react and get this bill passed will dictate whether we're in a recession for 2 years, or if even after 15 or 20 years we still haven't recovered. Heck, we might not EVER recover if we don't do anything.

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TheBrutalTruth said:

Life is a bitch, desertrat,

Of course, it helps that my perception is that the economy is really just fine.

Besides, we have to swallow the fact that we can't borrow our way out of trouble sooner or later, and frankly, I'd rather it be sooner.

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1. The US stock market tanks. Bank shares collapse, as do the valuations of all highly leveraged financial institutions. Weaker versions of this occur in Europe, in Japan and in the emerging markets.
2. Credit Default Swap spreads for banks explode, as will those of all highly leveraged financial institutions. Credits spreads generally take on loan-shark proportions, even for reputable borrowers. Again the rest of the world will experience a slightly milder version of this.
3. No US bank will lend to any other US bank or any other highly leveraged institution. The same will happen elsewhere. Remaining sources of external finance for banks, other than the facilities created by the central banks and the Treasuries, will dry up.
4. Banks and other highly leveraged institutions will try to unload assets at fire-sale prices in illiquid markets. Even assets not viewed as toxic before will become unsaleable at any price.
5. The interaction of a growing lack of funding liquidity and increasing market illiquidity will destroy the banks’ business models.
6. Banks will stop providing credit to households and to non-financial enterprises.
7. Banks will collapse, both through balance sheet insolvency and through liquidity insolvency. No bank will be safe, not even the household names for whom the crisis has thus far brought more opportunities than disasters.
8. Other highly leveraged financial institutions collapse on a large scale.
9. Households and non-financial businesses revert to financial autarky, among wide-spread defaults and insolvencies.
10. Consumer demand and investment demand collapse. Unemployment shoots up.
11. The government suspends all trading in financial stocks until further notice.
12. The government nationalises all US banks and other highly leveraged financial institutions. The shareholders get nothing up front and have to wait for an eventual re-privatisation or liquidation to find out whether they are left with anything at all. Holders of bank debt get a sizeable haircut up front on the face value of the debt and have part of the remainder converted into equity that shares the fate of the old equity.
13. We have the Great Depression of the 2010s."

Bongulator said:

I have zero problems throwing out bad firms. None at all! But the problem is that doing nothing won't just punish them. It'll punish ALL firms, and everyone who works for them, and all the people they owe money to.

Here's the former chief economist of the European Bank for Reconstruction & Development (not partisan, not even American) talking about what might happen next:

"If the markets fear that the nays have thrown their toys out of the pram for the long term, the following scenario is quite likely:

1. The US stock market tanks. Bank shares collapse, as do the valuations of all highly leveraged financial institutions. Weaker versions of this occur in Europe, in Japan and in the emerging markets.
2. Credit Default Swap spreads for banks explode, as will those of all highly leveraged financial institutions. Credits spreads generally take on loan-shark proportions, even for reputable borrowers. Again the rest of the world will experience a slightly milder version of this.
3. No US bank will lend to any other US bank or any other highly leveraged institution. The same will happen elsewhere. Remaining sources of external finance for banks, other than the facilities created by the central banks and the Treasuries, will dry up.
4. Banks and other highly leveraged institutions will try to unload assets at fire-sale prices in illiquid markets. Even assets not viewed as toxic before will become unsaleable at any price.
5. The interaction of a growing lack of funding liquidity and increasing market illiquidity will destroy the banks’ business models.
6. Banks will stop providing credit to households and to non-financial enterprises.
7. Banks will collapse, both through balance sheet insolvency and through liquidity insolvency. No bank will be safe, not even the household names for whom the crisis has thus far brought more opportunities than disasters.
8. Other highly leveraged financial institutions collapse on a large scale.
9. Households and non-financial businesses revert to financial autarky, among wide-spread defaults and insolvencies.
10. Consumer demand and investment demand collapse. Unemployment shoots up.
11. The government suspends all trading in financial stocks until further notice.
12. The government nationalises all US banks and other highly leveraged financial institutions. The shareholders get nothing up front and have to wait for an eventual re-privatisation or liquidation to find out whether they are left with anything at all. Holders of bank debt get a sizeable haircut up front on the face value of the debt and have part of the remainder converted into equity that shares the fate of the old equity.
13. We have the Great Depression of the 2010s."

Maybe we'll see how accurate that is. Some of it is coming true now.

Click to expand...

I have zero problems throwing out bad firms. None at all! But the problem is that doing nothing won't just punish them. It'll punish ALL firms, and everyone who works for them, and all the people they owe money to.

Here's the former chief economist of the European Bank for Reconstruction & Development (not partisan, not even American) talking about what might happen next:

"If the markets fear that the nays have thrown their toys out of the pram for the long term, the following scenario is quite likely:

1. The US stock market tanks. Bank shares collapse, as do the valuations of all highly leveraged financial institutions. Weaker versions of this occur in Europe, in Japan and in the emerging markets.
2. Credit Default Swap spreads for banks explode, as will those of all highly leveraged financial institutions. Credits spreads generally take on loan-shark proportions, even for reputable borrowers. Again the rest of the world will experience a slightly milder version of this.
3. No US bank will lend to any other US bank or any other highly leveraged institution. The same will happen elsewhere. Remaining sources of external finance for banks, other than the facilities created by the central banks and the Treasuries, will dry up.
4. Banks and other highly leveraged institutions will try to unload assets at fire-sale prices in illiquid markets. Even assets not viewed as toxic before will become unsaleable at any price.
5. The interaction of a growing lack of funding liquidity and increasing market illiquidity will destroy the banks’ business models.
6. Banks will stop providing credit to households and to non-financial enterprises.
7. Banks will collapse, both through balance sheet insolvency and through liquidity insolvency. No bank will be safe, not even the household names for whom the crisis has thus far brought more opportunities than disasters.
8. Other highly leveraged financial institutions collapse on a large scale.
9. Households and non-financial businesses revert to financial autarky, among wide-spread defaults and insolvencies.
10. Consumer demand and investment demand collapse. Unemployment shoots up.
11. The government suspends all trading in financial stocks until further notice.
12. The government nationalises all US banks and other highly leveraged financial institutions. The shareholders get nothing up front and have to wait for an eventual re-privatisation or liquidation to find out whether they are left with anything at all. Holders of bank debt get a sizeable haircut up front on the face value of the debt and have part of the remainder converted into equity that shares the fate of the old equity.
13. We have the Great Depression of the 2010s."

Maybe we'll see how accurate that is. Some of it is coming true now.

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TheBrutalTruth said:

Yeah, I suppose the alternatives are as follows.

1. Accept that we must give up our morals now, and allow the bail out to go through.

2. Or wait until later, and have our morals trampled by the masses of idiots who will beg for more government intervention with out realizing the fact that it was government intervention that has gotten us into this crisis. (That, and the greed of the banks of course.)

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fdd2blk said:

my money grows on trees. it's not gonna lose it's value anytime soon.

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TheBrutalTruth said:

I envy you, I make my money using my brain, so if the shit hits the fan I'm going to be screwed....

Don't suppose you could find use for a crappy ass field hand could you?

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TheBrutalTruth said:

No, the fact that you are producing something would argue to the contrary. That, and I haven't seen you say anything idiotic yet... well except claiming to be an idiot which is pretty idiotic in my book.

Though, I don't know how much weight that carries, based on the fact that I (after years of being accused of being one) freely admit to being an opinionated jack ass. Sometimes its easier to take the name opponents give you and make it your own.

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