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

[zoethe.livejournal.com]

We've already thrown $600 billion into this hole and not made a dent in it. I'm not sure how another $700 billion is going to help.

This whole thing scares me silly. But that doesn't mean that this lifeline leads to anything but an already rapidly-sinking boat.

[snowspinner.livejournal.com]

We actually threw $600 down a different, nearby hole.

That hole, fwiw, was a stupid hole, and I wish it had required Congressional approval so that it could have been shot down as it deserved to be. Individual institutional bailouts are idiotic.

Buying up assets that have tangible value but don't currently have a market in which to sell them, when you can afford to sit on them for a decade and then sell them off at a profit?

Good idea. If I had $700 billion, I'd do the bailout myself, and I'd walk out a trillionaire.

[zoethe.livejournal.com]

You're working from the assumption that all that bad debt isn't dramatically overinflated. I have seen houses in nice neighborhoods that sold a couple years ago for $250,000+ offered at sheriff's sale for $100,000 - and being bought back by the bank in a paper purchase because there are no bidders.

Will this eventually turn around? Yes, someday. If there was some mechanism in the bailout plan that would actually pay back the treasury, then I would be more inclined toward the plan. But at this point, it doesn't even give us that.

[snowspinner.livejournal.com]

The debt is overinflated. Though how overinflated depends on the neighborhood. If we're talking California and Florida? Yeah. Those should be bought at 10, 20 cents on the dollar. Mortgages in other places are closer to sanely valued.

I'd like to see decisions made now about what to do with the fund after it's turned a profit, but I can't see how to do that and have it pass Congress. It's probably easier to do it separately, because there are plenty of people who would support a bill to take profits from an existing fund and apply them towards the federal debt/Social Security/whatever who would not vote to support the creation of said fund. So that's just legislative reality.

[zoethe.livejournal.com]

Which is exactly why the first versions of the bill - the 3-page proposal, which did not even acquire the debt and the just-defeated version - needed to go down. I'm not completely against a bailout, but I am against leaving the same foxes to guard the henhouse. The whole economy is not going to implode because they are taking time to write something worth signing. That's why I think it was brave to stand up against the usual White House Chicken Little tactics and say no.