In brief: the failure of the bailout

[demiurgent]

It's surprisingly simple.

Neither major political party was willing to sacrifice the election to save the nation.

There is nothing more basic than that. Neither party would sacrifice personal power in order to save the economy of the United States of America.

My representative voted Nay. For the first time, I'm considering voting against her in November. I'm certainly calling her office tomorrow to express my deep disappointment in her.

For those who don't want to see the bailout of Wall street firms because gorsh, they's all rich and it's not fair? I hope you really, really enjoy the next ten years.

Comments

[richm90071.livejournal.com]

If you think this is just about "bad debt" then you don't really understand the problem. Most of the lost value comes from derivatives (http://en.wikipedia.org/wiki/Derivative_(finance)) like Mortgage Backed Securities (http://en.wikipedia.org/wiki/Mortgage-backed_security) and Credit Default Swaps (http://en.wikipedia.org/wiki/Credit_default_swaps). The models used to calculate the values of these financial instruments were seriously flawed (). The risk of default on the underlying mortgages was underestimated, consequently, the value of the derivatives was overestimated. This is the "fictitious wealth" I'm referring to, and now that the flaws in the models are known, that "wealth" cannot be recovered.

These overpriced derivatives make up the bulk of the "nonperforming assets" that will be purchased under Paulson's bailout plan. For highly inflated prices.

[richm90071.livejournal.com]

Sorry, left out this link: How Risk Models Failed Wall St. and Washington (http://www.washingtonpost.com/wp-dyn/content/article/2008/10/01/AR2008100101149.html)

[richm90071.livejournal.com]

Credit markets to Washington: Bailout isn't enough (http://biz.yahoo.com/ap/081003/credit_markets.html). "After House OKs bailout, credit markets tighten on fears the plan isn't enough to help economy"

[flemco.livejournal.com]

Yo, homes.

Hit this post up, if you would. (http://flemco.livejournal.com/2541646.html)