Why Friday Came Early 46 comments
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Okay. So now I reveal myself for what I am. A conspiracy theorist, a nutcase, a crank.
But tell me, why did Friday come early this week?
Isn't it a tradition for bank reorganizations to be announced after market close on Friday nights? Isn't part of the reason for that to give markets time to chill out, think a bit, notice that the ATMs still work and the branches have not been demolished, to let the sun rise and shine for a whole two days, in order to diminish the possibility of people freaking out?
So, here is today's news cycle. Red State Republicans react to a unprecedented popular outrage among their constituents and refuse to get with the program. It is leaked that President Bush solemnly opined, “If money isn’t loosened up, this sucker could go down.”
Was he standing at the teller window with a note about a bomb when he said that?
And, for good measure, the government announces "by far the largest bank failure in American history" with less than 16 hours to market open.
That loud noise, was that the sound of a single gunshot? Have the robbers killed a hostage, to show that they mean business?
Yes, the irony is delicious that Paulson's plan has for the moment been scuttled by the ideologues that his party has cynically nurtured, by the base that the business wing of the party always thought they could play. And yes, the House Republicans' alternatives, as reported by Justin Fox, are laughable.
But that doesn't explain the sequence of events this evening. Nor does it excuse the fact, that if a legislative response to the crisis was so critical, a single deeply flawed proposal was thrown at the Congress a week before adjournment, under terms that basically said "pass this, or else". It is surely coincidental that the plan was the most generous and least disruptive policy possible to industry from which Secretary Paulson hails.
No, I am a nutcase. These are all public servants doing their very best for the American people in a difficult situation. We need to pull together, rise above politics. Our leaders would never manipulate markets to frighten and punish the public so that we fall into line. That could never happen in the United States of America.
I am dark. Secretary Paulson could have offered any number of proposals to help ensure that this collapsing house of cards is a controlled demolition. He and Dr. Bernanke had months to put together policy options, long months between the fall of Bear and the fall of Lehman to create orderly processes for disorderly events they knew could come. At the last moment, they offered one option, a particularly unpersuasive plan imperiously presented as a fait accompli. When Congress balked, they relented and offered a few crumbs so that the people we elected could nibble at the edges without altering the core. And today, when it looks like those crumbs might not have been enough, we have the largest bank failure in American history, announced, oddly, on a Thursday night.
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This article has 46 comments:
i am also sure from reading the "bailout" plan. that it lacked transparency & oversight - and really this is core issue. what is it that is being covered up?
The 700 billion is the total "stability"package.At this stage we can not quantify the actual cost.
By injecting liquidity into the financial sector ,we can stabilize economy and the markets .
Since the Treasury would buy the "collateral" at a premium ,that would free up additional reserves which the institutions had to maintain as they marked down the value of the collateral,creating additional liquidity.
Irrespective of the nominal size of the added liquidity to the system,the amount of stimuluos would be that amount times the multiplier(effect) which is approximately the factor of seven.
In other words if you inject into our system 700 billion dollars,the actual stimulous is 700 billion x7 = 4.9 trillion dollars .This will stabilize financial system and jump start the economy.
In addition,the value of the "collateral" bought by the Treasury would likely appreciate in value.
It is conceivable that under the circumstances,the
U.S economy would receive almost 5 trillion dollars of stimuluos at a minimal or no cost to the taxpayers.
This is a very effective package. Let's get the politics out of the way and get it done.
What part of government backed banking cartel sounds like "laze faire"? How about we try it first before we criticize it? The bankers, in cahoots with government, have been cheating us and causing economic devastation since 1694 when the Bank of England invented fractional reserve banking.
If I've misread you, my apologies. In this country, we have not had a free market since 1913.
The Meltdown of the Republican Party.
We all know that there is something serious with the economy. We all know that John McCain made a major mistake on September 15th when he clearly stated his belief that the fundamentals are strong. The fact that the Democrats have crossed party lines and embraced President Bush's plan to help the economy in less than one week is nothing short of incredible. The problem is that the health of the Republican Party has deteriorated so rapidly. It can be seen in the bowing down of Paulson to Pelosi. Obama embracing Bush policy. McCain revolting against the leader of his party. This severe meltdown in the health of the economy and the health of the Republican Party are intrinsically linked. How to solve it? The democrats need to stare down the shifty eyed McCain revolt. They must pass the plan and give the Republican President a bill on his desk today.
I would meet Paulson and provide him with all the tools he needs to perform surgery on this economy and extract the cancer that has spread so malignantly though the economy. What if the Paulson Plan actually works really well? What if the timing is right and we are buying securities at a discount and a few years down the road the Housing Market takes off? Home start appreciating at 10% per year in the areas of the country hardest hit where everybody wants to live. California and Florida, Las Vegas. At the same time the voters can vote on the health on the Republican Party. I like Paulson's plan he is gambling on the American People. He is speculating that Americans are going to recover. He seems to be the biggest Patriot of them all. I think if Republicans mess around much more Paulson is going to walk away from all of this. He sure doesn't need the cash. And why would he try to make a new McCain Paln work in 4 months that he already said wont work. He must be feeling like Ceaser right now. Et tu Brutus...
Oh yeah one more thing. The leaders of our country should include one more ear mark that requires People running for President to fully disclose their health. The health of any future presidents is intrinsically tied to our healthy economy. The leader must be healthy from the top down. Cut the cancer out of our economy and let the voters face the meltdown in the leadership of the Republican Party.
It is the banks who distribute this money on behalf of central bankers and it is the banks and their executives who profit the most during these periods of easy money. Simply consider the net-worth of top Goldman exec' John Corzine, Robert Rubin, and Hank Paulson. Each walked out of Goldman Sachs with over $500 million. Funny how they end up in Washington to eventually clean up the mess that ultimately ensues. Their cure is always another tax-payer bailout or more easy money.
The game plan is simple for these banks. Create leverage of such size and scope that they become "too big to fail," and thus their survival is guaranteed by the ramifications of their failure.
These bankers dine and carouse with the very central bankers that finance such leverage via artificially cheap and counter-fit money. Without a central bank and its printing press, these jokers would be nothing more than a local used car salesmen.
Quoting Lord Acton, "The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."
Later is now. It is the people versus the banks. To be more clear, it is the people versus the central bank. They imply to have a gun to our head and are asking for another $700 billion.
If "this sucker goes down", Alan Greenspan, Ben Bernanke, Robert Rubin, John Corzine, Hank Paulson, Anthony Mozillo, Franklin Raines and a number of others who have enriched themselves courtesy of the Federal Reserve will be more hunted than Osama Bin Ladin,
I think we can all agree Republicans, Democrats, women, men and moose. You look into McCains eyes and you see 6 letters. C A N C E R.
Connect the dots to the S&L Keating 5 and the current cancer in our economy and McCain's shifty eyed politics will be clear.
Paulson plan will rally the markets.
McCain's face is melting down as fast as the republican leadership and this economy.
While we have been working for political correctness, a shorter work week, early retirement, technological perfection, "want it now " methodology and everything else associated with a lazy society, our country has slipped to the brink of disaster. We have allowed nearly all of our manufacturing abilities to die as they were shipped overseas.
We have practically zero GNP left. We had better get ready to start at ground zero and begin the long and arduous task of reconstruction.
That will be the only way, but not before we hit rock bottom.
Hey, I think I see her now.
Complete horsesh-t. No one has even seen it. Warren Buffet ain't buying it.
Seems to me that the place where we can get the most traction against this thing is in the House of Representatives, not the Senate. Only 1/3 of the Senate are up for re-election. But each and every US Representative is going to be judged by his constituents in the voting booth in a few short weeks. Let them know, loud and clear, we can't vote against Paulson, and we can't vote against Bush, but we can sure vote against them. And if they pass this Bill, that is exactly what we should do.
Then we can rebuild our prosperity. But if they take away our rights, then we're really in trouble."
Losing wealth and freedom is the real conspiracy, the lie put forth by neo-con controlled is nothing but a precursor to Government tyranny.
Wetwillie upstair, what you wrote is admirable. America needs some tough medicine to get back on her feet. Bailout is no medicine at all.
www.youtube.com/watch?...
I am not wealthy, which makes my stock investments in WM, CFC, and NCC even worse...a couple thousand loss is nothing or pocket change to others, I suppose, when t boone pickens just lost a billion in wrong bet on oil....how can markets even function when govt. selectively decides without any merit which cos are too big to fail and which ones will be example...I just called my stockbroker and they didn't know what to do....either....can I still sell for loss WM which does not exist, CFC got bought out, maybe NCC will....at least I didn't own lehman or fre or fnm, but some of mutual funds owned WM...so that is a double whammy, on top of my taxes going up so jamie dimon can get the largest thrift in the country for less than 2 billion....for free, basically....while I am getting screwed.....WM has been less than ethical for a long time but I guess analysts were just full of *()&, I am so sick of it all, hyping stocks just so others can sell for profit...
why did merrill get bailed??? was it too big to fail??? their stock is now up...lehman left to die??? aig rescue only to help chinese sovereign wealth fund, had nothing to do with "too big to fail" or investors....apparentl... there was not enough interest in WM...
This is worse than the previous crash, because our "elected" govt. and president are so evil..paulson is from GS, so what a coincidence it won't fail and buffett will invest in it...what a maverick!!!!this is just pragmatism...still too expensive for regular investors at 133...this morning, buffett made a billion just from getting preferred shares which ordinary investors do not get....how is this fair???
When world com was too big to fail?? ebbers was a crook and in jail now.....kenneth lay died in prison....why aren't the financial crooks treated the same?? is it because they are in collusion with bushies??? anybody....we are all suffering for something that is not our fault...except for investing in supposedly reputable stocks a growth stock which a lot of investors did...the largest thrift in country should be safe, right???? WRONG
How about other options? Why just ONE? An expensive one at that
SO TRUE. In a free market system there should be you live and die by the sword rules . NO BAILOUT You guys are truly right. Harmful to your kids and their kids and even their kids TRUE TRUE TRUE. This is a hastily crafted piece of garbage being shoved down the American's throats . Shouldn't this take months to draft?
Come on my dear friends in the State PLEASE DO NOT LET THIS HAPPEN TO YOU. If your government has 700 Billion burning a hole in its pocket then use it for something that will provide decades of stimulation, build roads, bridges, hospitals, schools for underpriviledged, computer schools ... put teachers and professionals back to work. That would create a new economy. THIS BAILOUT will only create debt for you and your children for decades. Your president has irretrievably failed you Americans and us, the rest of the world.
I am truly sickened to my stomach that my dear friends to the south must endure this .. Loss of jobs, 911, Katrina, GM and Ford and Chrysler declines, loss of houses, bankruptcy. Haven't you been through enough AND NOW you are handed a bill that your grandchildren may never be able to pay. This sickens me to the core people. Please march onto the Whitehouse and speak your disdain for this unholy solution.
I'll go the Reagan "Air Controller" route. Give the $$ to smaller Banks to loan to business to keep credit flowing. And throw the AG at those Big Crooks.
Where's it say, Govt. is the de-facto insurer of every big horse player that has a bad day or he'll close the track???
I have TV dinners in my freezer, they have $75,000., Get the picture.
You'll see a lot of them in Vegas--they get free tickets & rooms cause those Casinos Comp --"Doing what you feel is right"---Wanna bridge???
You and your mafia administration are history -- bad history.
THE $700 BILLION IS THE DOWN PAYMENT THEY ARE NOT GOING TO SHOCK THE AMERICAN PEOPLE WITH THE TRUE NUMBERS.
IF YOU CONSIDER THE NUMBER OF BANKS IN THE US WHICH RUNS IN THE THOUSANDS, WHAT IS $700 BILLION.
LOU DOOBS ON CNN HAS BEEN SAYING THE BROKEN GOVERNMENT.
AMERICA IN THE LAST 16 YEARS HAVE BEEN FOOTING THE BIGGEST MILITARY EXPENDITURE THERBY SAVING THE EUROPEANS FROM CUTTING THEIR DEFENSE BUDJET.
NOW BUSH HAS REVIVED THE COLD WAR WITH RUSSIA OVER GEORGIA. RUSSIA HAS NOW INCREASED THEIR MILITARY BUDGET BY 25%
GOD HELP AMERICA AND WHEN THE AMERICAN PEOPLE WANTS A CHANGE THEY MUST SEEK AN INDEPENDEND PARTY
THAT DOES NOT WORK FOR THE LOBBYIEST IN WASHINGTON.