I am now wondering where the $700 billion will come from. We already run a deficit of hundreds of billions a year, so there certainly isn't any excess of tax dollars to spend on this. That means we borrow it, in the form of government securities sold, probably, to the Chinese government. Are they really dumb enough to finance this venture? And, can we survive long term with the Chinese government holding trillions of dollars of our securities?

A rational approach to this is a huge increase in the total income tax take, with all of it coming from the very high income sector, who are the very ones to benefit from the maladministration of the financial markets that led to this. But, we will be told that will exacerbate the recession. If so, so what? Isn't the alternative another great depression?

Give the patient anti-biotic until a QUALIFIED group of experts have AMPLE time to diagnose and reccomend the best treatment.

We were Suckered into the looming mushroom clouds of Iraq by this administration. NOT THIS TIME!

The man overseeing the bailout is the ex-CEO of Goldman Sachs, a Wall Street Company. He helped cause the crisis.

Paulson helped obtain the SEC exemption which allowed brokerages to increase leverage to 60:1 from 12:1. need more? via FDL

The money is Paulson's to use for buying commercial and residential mortgages and mortgaged backed securities as he chooses.

No one has any oversight over him, and he can pay any price he wants to, including face amount of the debt.

Courts cannot review his decisions, nore can any regulators.
He has to report to Congress once every six months.

He gets 700 Billion dollars to use as he sees fit, looking after the taxpayer is a "consideration" not a requirement.

Bet on that 700 Billion dollars being gone before January 20, 2009. Bet on Treasury asking for more.

That is $2,324 dollars per man, woman and child in America

There is no bailout for mortgage holders.

Banks get bailed out, but not ordinary people.
Banks and brokerages made record profits these last eight years. Ordinary Americans barely broke even.

In 2007 Wall Street paid itself bonuses equal to the raises of 80 million Americans.

Banks bailed out by this plan need make no changes in how they do business.

Banks bailed out need not replace the management which drove them into insolvency.

Shareholders and bondholders of such banks do not lose a cent.

The securities which caused this crisis are still allowed.

Expect the 700 billion dollars to increase inflation, especially in oil.

Bush is asking you to trust his administration with 700 billion after spending 580 billion on the Iraq war. Do you trust him?

Mrjj

You summarize the request quite accurately.

Not only is Paulson using this crisis to advance his own personal agenda, but there is nothing that the governmet can do that will address the main problem that is causing this credit crises. That is falling real estate values. All of us must accept that a huge amount of Americas net worth has been and will continue to decline. That is the nature of asset bubles.

I watched my own home, that I paid 200K for 20 years back go to about 850K (in comparables) and now drop about 20% and the whole time wonder where does all this funny money come from and where does it dissappear. I received multiple offers to borrow against the appreciation during the bubble but could not understand why I should, since it appeared, when I first bought, that the whole object was to reduce the mortgage. I have done that. Now why should I help bail out those that speculated on this nutty bubble. Especially the Wall Street sharks as well the numerous real estate flippers in my own community that are now suffering.

All of us should resist this bail out. Protest. Write to your congressional representatives. This cannot be allowed to continue. Remember the imputus for this request is based on the panic many of us felt last Wednesday -- I felt it for sure, but sit back and think. This cure is much worse than last week's fever.

We know these people are all absolute liars and incompetents.

Screw them.

I called and left a message for Hillary and sent a fax. It never does any good but I did it anyway. I asked for Paulson and Bernanke to be fired. They are the guardians of our econony and have failed miserably. They deserve to be fired.

Actually, if it were up to me I would fire the WH and congress and find some regular people that have proven track records for being honest and hire them. When you come right down to it McCain and Palin are both huge liars. That the voters are even entertaining the idea of having them lead the country is absurd. Bush is a liar and look what that got us.

Call your congresspersons and senators and leave a message and send a fax. All of them have local numbers in the locales they serve. I realize saying they serve us is an oxymoron. It's just a figure of speech.

this bailout is dwarfed by the Fannie/Freddie bailout a few weeks ago. The cost of that hasn't even been calculated yet, but it will be multiple trillions of dollars. The Bush Administration is trying to keep that off the federal books, because it would push our budget deficit way beyond the legal ceiling.

We been robbed.

If our Congresscritters pass this scam, we should all stop paying taxes. Massive taxpayer revolt.

I'm going to claim that this entire issue is really very simple. That it is simple and that the underlying failures are easy to understand is why it is being complexified by those who are the guilty parties.

The collapse was caused by too highly leveraged investments, the same thing that caused the crash in 1929. When you have a bet where one only needs to put up 3% (10% in 1929) then it only takes a small movement downward to generate a margin call. It doesn't matter what the entity that is being traded on margin is, it only matters how easily the margin call can be covered.

Such leveraged bets can never be covered by selling the underlying assets. It doesn't matter what the new settlement price is, the ratio between "value" and price is just to high.

The mortgage crisis is also very simple. Some fraction of loans have and will fail. Let's say 20%. These loans, unlike the bets between financial institutions, are backed by real assets. Even with a pessimistic projection that the home values should end up at, say, 70% of the original price on average. So we have a loss to the system of about 14% - a shock, but not fatal.

Any combination of re-adjusting the mortgages, an orderly selling of foreclosed properties (including keeping them in the bank's inventory until things settle down) and new capital to allow the banks to meet reserve requirements can do the trick.

There is no way to save the money of the financial margin players that's why they are tying the "crisis" to the unrelated housing downturn. Paulson has over $100 million in stock (not counting options) from his former firm. Notice that this is the one that will probably survive.

Any "bailout" for financial firms is really a way to pay back gamblers who lost their bets. It has nothing to do with preserving the housing market, or keeping the overall economy sound.

This type of misdirection worked for the S&L crisis and it will probably work this time as well. There is no way out of a Ponzi scheme without someone losing money. In this case the players are trying to make it the taxpayers.

This financial scandal happened because the Democratic Party has gotten too much like the Republican Party. From the Republicans we get "trickle down economics". From the Democrats we get "trickle down government." This might not have happened 40 years ago when the liberals controlled the Democratic Party. But today, Schumer, Clinton, Dodd, Biden, etc. aren't going to bite the hand that feeds them. I don't even trust Barney Frank anymore.

Both parties serve their masters on Wall Street; the bankers, fund managers, real estate investors, the credit industry, Insurance etc.

No solution to this problem will cause any angst in the finanical community. The Democrats will tell the Bush gang they need to make this "bi-partisan" so they will need a bone to throw to their constituents. The Bush gang will give the Dems some picyune help with people's mortgages or
some inconsequential tax cut and the Dems will fan out in television land and bloviate on the "Bi-partisan" wonders that have been accomplished.

But the people who caused this financial train wreck will pay nothing or next to nothing. The heads of Fannie and Freddie, Merrill Lynch, Bear Sterns, AIG, etc. will walk away with their ill gotten gains and never look back.

AND, look for a truckload of patronage in this package. I think this agreement will eventually make Jack Abramoff look like the Plutarch of Populism.

The "solution" to this tragedy will guarantee the sharks will be back in 10 years and it will be deja vu all over again.

In the words of that glorious paragon of integrity, Democratic Congressman Ozzie Meyers of Philadelphia;

"Money talks and bullshit walks."

Let me confess up front that I have not sat down to really think all this thru. I probably could, and probably will at some point, but I haven't so far.

Here's the parts I HAVE thought thru (took about 15 minutes):

(1)Giving up what will almost certainly become 1 TRILLION $$ (that we actually don't even have) in real terms on the basis of a two-page "plan" is beyond crazy. (2)The point-people pushing this do not care about me (or you, or any other ordinary, everyday people). I'm not saying they actively wish us harm, I'm just saying they're temperamentally indifferent - just like the people on those New Orleans rooftops, they'll try to get around to us sooner or later, but we're not a priority. (3)It is simply irresistable to compare this scheme to the Iraq War issue: A poorly-articulated "pig in a poke", rushed thru without thought or examination on a false premise of immediate emergency.

I don't know what should be done. I actually don't HAVE to know, Thank Goodness: That's what I elect people to decide, and it's high time they earn their positions of public trust. If there really IS a genuine crisis, and we really CAN do something measured and constructive about it, fine - let's figure-out what it is, and get at it with all deliberate speed. But UNDER NO CIRCUMSTANCES accept what this discredited Administration says at face value: It manages to combine deviousness with fundamental incompetence in a way unique in my experience. We would deserve whatever we get, if we allow them to jerk that football away one more time.

With the clammor to "do somethng fast" I'm thinking some sort of legislation is inevitible, and from the way they are talking it seems like the gist will be to hand it over to an appointee who will supposedly be independent but will serve at the President's pleasure. Wouldn't the best solution be to write congressional oversight directly into the law, requiring periodic appearances and reporting, with automatic or expedited removal of said appointee upron refusal to appear?

God help us if Congress gets steamrolled into this.

I have no faith that anyone in Congress will stand against this, with the November elections so close.

The provisions against oversight are more frightening even than the number of billions involved. The SEC could literally do *anything* they want to with the money, including start another war. I know that's a ridiculous example, but the draft as it currently stands would actually allow it, and the Judicial Branch is explicitly excluded from ruling against any such actions, no matter how outrageous.

I want some frakking leadership to stand up against this! Obama? Dodd? Bueller? Anyone?

Losing Faith in Markets; Losing Faith in Democracy

As I read Paulson's proposed bill to authorize his bailout of the financial industry, I am struck not so much by the loss of faith in free markets, but by the clear loss of faith in democracy. Paulson is calling for almost absolute executive power with no oversight by congress, courts, or administrative entities. This is the power of a king. Essentially, Paulsen is telling us not only that markets don't work but that, in a crisis like this, democracy doesn't work either. This is much like Bush's own claims in regard to the war on terror. We need to ask is the fear of economic collapse, like the fear of terrorist attack, causing Americans to give up their precious democracy for a fleeting sense of security?

Shanghai Consolidated Index just opened up 8%. It's now up over 23% since its low last Thursday.

Thank you American taxpayers.