The people with ready capital have no incentive to invest it either way, bailout or not. As more institutions collapse assets will be sold off at more favorable rates as well. No need to risk it now in tough negatiations at all.

I think they need to fail because the system stands a chance of getting fixed if they do. If the impact of their extremely poor and in many cases unethical business practices is lessened then the political will will not exist to make the needed regulatory changes.

The bail out, I am afraid, is the last desparate attempt by the Reaganomics standard bearers to stave off the meaningful regulation that needs to take place.

People are getting tired of the insanity of our Corporate pay strucutures. The CEO of WAMU worked for 3 weeks and will receieve total compensation of $18.5 million. CRAZY.

So what is Rogoff's take on what happened last week, then? I have heard many traders and finance guys say this week that the capital market almost completely "froze up" and there was a situation of sheer panic about money market funds "breaking the buck". That was before the proposed bailout, so how does Rogoff's theory about the liquidity crisis being due entirely to the promise of a bailout account for that panic?

Does this mean John McCain's blowing up the bailout deal with his suspension stunt was actually the best move for the economy?

Mr. Magoo caused some accidents along the way, but he always got to his destination. Is McGoo a mad genius? (I hope not.)

http://www.youtube.com/watch?v=plyWxrHLE14

I meant not saving the gamblers reckless skins

Sure, but it's not good that people on Wall Street are losing their jobs, it's comeuppance. How many jobs have investment bankers cost people by agitating for fee-generating mergers that leave both workers and shareholders poorer in the end?

Heck, one reason why any public bailout by the government should include an equity stake is that the government, as a shareholder would then help to direct the activities of those banks -- to make sure they operate in a way that's better for society.

This is a one drug cures all ailments crisis. The Repubs needed something to cause an atmosphere of fear so voters will go for the old fart with the experience and not the young upstart. The Repubs in Congress need a campaign issue - if they can con the Democrats into passing this terrible piece of legislation, at Bush's bidding, they will all vote against it, and run on the issue that the Dems gave away the treasury to Wall Street. If the Democrats don't pass something similar to the Bush request, they can run against the Democrats for failing to make any effort to save the nation in a time of crisis. It is pretty easy to understand, I think.

I doubt that the crisis is real. Businesses may fail, and several banks have now done so, but so what? Businesses need to fail when they make such bad mistakes. Meanwhile all of those dollars are still floating in the international market and some use needs to be made of them. So, they will continue to be available as loans, probably just with higher interest rates.

Let's throw out another "Is This Crisis Real?" gambit.

Everyone talks about the huge TED spread -- the difference between the T-bill 3 month rate and the LIBOR -- as proof that there's a desperate credit crunch going on.

But there's nothing particularly sacrosanct or credible about LIBOR or any particular agreement about what it means.

For example -- and in contradiction of how the media describes it -- LIBOR tells us nothing about what rate banks will loan to each other. Why? Firstly, it's not based on actual loans, and second, it's based on what somebody in each of the sixteen or less London contributor banks estimates her bank would have to pay if it were to borrow that day shortly before 1100 GMT.

From the British Bankers' Assn. definition:

A. An individual BBA LIBOR Contributor Panel Bank will contribute the rate at which it could borrow funds, were it to do so by asking for and then accepting inter-bank offers in reasonable market size just prior to 1100.

Now, if you were a bank (presumably, half the "contributor" banks are American and Paulson promised to bail out foreign banks, anyway) which was looking forward to being bailed out by the taxpayers, it seems to me you'd have an interest in making the TED spread as large as possible to encourage the sense of panic.

Easily done. Just report your "best estimate" of what your cost of borrowings would be if you were to borrow and make it as high as you think you can get away with.

Notes: 1) Banks "contribute" the daily rate even though they may have no intention of borrowing, didn't borrow, and didn't get turned down at a rate lower than they report.

2)Since you didn't actually borrow, your rate "estimate" can't be challenged by a rate generated by a real transaction-- and you won't go to jail.

Thanks Professor. Interesting but not surprising news. I have thought throughout that since even little folk like me were aware of the fraud and conjob the Banks and Wall Street were perpetrating that it was unlikely to unravel the nation's economic system. They knew what they were doing and they know how big it was and when it was likely to start crashing down around them. Lo and behold it did!

They should pay for their malfeasance. If the financial industry needs help we'll know it when the time comes. I see no need for precipitous action. Curious that the Dems are the ones so eager to service Wall Street's needs isn't it?

This attempted heist of the Federal treasury has always struck me as one last giant robbery before Bush heads out the door on behalf of one of his favorite constituencies before they lose power.

What I see:

This crisis developed around the time it became clear McCain's bounce was not going to last.

Congress has only managed to come together and agree on a few substantial things, like transferring a trillion of taxpayer dollars to