Article

2008-09-23 Home Front Economy

A compelling argument in favor of the bailout

Archived material is restricted to Rantburg regulars and members. If you need access email fred.pruitt=at=gmail.com with your nick to be added to the members list. There is no charge to join Rantburg as a member.

Posted by Mike 2008-09-23 07:52|| || Front Page|| [10326 views ] Top

#1 I've heard all the economic arguments for the bailout, but it still seems like we are rewarding the very people who DID it to us. It wasn't an accident, it was caused by greed and perpetuated by fraud and cover-up until the lid blew off the whole mess. I don't want an economic collapse, and I don't want to be jobless. But can we let a few thousand people plunder such a sizable portion of our country's wealth without any punishment? Should we reward them for it? Most of the operators in this have already gotten massive exit packages. It just seems wrong, ethically, morally, and financially. But I don't have a great enough understanding of the system to suggest a better tack. Seems like we have to do something or we're dead in the water.

Posted by bigjim-ky 2008-09-23 10:16|| 2008-09-23 10:16|| Front Page Top

#2 Of course, ANSWER is against the bailout, they're afraid it might work. They want the economy to collapse. Revolution, fighting in the streets, and all the rest of that commie BS.

Posted by Spot">Spot 2008-09-23 11:11|| 2008-09-23 11:11|| Front Page Top

#3 The problem is that the Congress, the President(s) have been too cozy with the very people that looted the economy. Before we do this bailout, we need investigations. But we cannot trust Congress with the investigations, as they are part of the problem. We need forensic auditors, the type that go into embezzlement cases. The results need to be public without spin.

I am a problem solver, but I do not see an easy way out of this one. We are only seeing the tip of the sh*tberg. Who can you turn to? Who can you trust? We need a tidal wave of sorts to put out most all of the Congress. The financiers who did this need some real punishment to serve as an example that one NEVER crosses the line again. I think that I better stop there.

Posted by Alaska Paul 2008-09-23 11:26|| 2008-09-23 11:26|| Front Page Top

#4 The exit packages, and golden parachutes, are most probably aspects of contracts the executives had with their employers who are now going belly up -- and you can't just blow off and negate those contractual provisions without doing severe irreparable damage to the foundations of US commerce. But, that's not the end of the story . . .

There are a number of standard contract principles that could be used to quash the massive reward of massive impropriety and bad judgement. For example, "impossibility of performance" and "frustration of purpose" may well be employed in a situation like this, where the executives have bankrupted the company. Also, "void as against public policy" may very well be one to use in a situation like this.

Separately, RICO and other laws that create criminal penalties for white collar crime certainly seem appropriate.

So, bail out the companies and keep the economy running. And, then take the trash out!

Posted by cingold 2008-09-23 12:13|| 2008-09-23 12:13|| Front Page Top

#5 Another take on the situation.

Posted by James">James 2008-09-23 12:16|| http://idontknowbut.blogspot.com]">[http://idontknowbut.blogspot.com] 2008-09-23 12:16|| Front Page Top

#6 A calm and sensible voice in the midst of the shouting, James. I have to admit, we benefitted from the higher interest rates in our money market accounts these past few years, that were paid out from profits the investment companies made using our money. And the trailing daughters lost money when they invested some of their savings for college in a mortgage backed security a year ago. They cashed out and left their loss on the table months ago, so it could have been worse. But the financial wallahs were only executing our investment choices; we own this as much as they do.

cingold, your expertise brings the comfort of useful knowledge.

Posted by trailing wife ">trailing wife 2008-09-23 12:30|| 2008-09-23 12:30|| Front Page Top

#7 Problem as I see it, People were led to think not of a "Home" but of a "Investment' when buying a place to live.

I'm not with the thundering herd, I see "Home" and have no intention of "Selling in a few years"
Instead I plan to build what I need, live in it until I die, and pass it on to whoever in my family survives me and needs a "Home". If none, then sell it and divide the cash, I don't plan to prosper from he building I call "Home", the prosperity is owning shelter.

Posted by Redneck Jim">Redneck Jim 2008-09-23 12:45|| 2008-09-23 12:45|| Front Page Top

#8 Rush made a comment this morning that said "You know the democrats are responsible for this mess because they are NOT calling for hearings. They are not going to investigate themselves." Too true. Am I not getting something when I believe that those who can't pay their mortgages should go into foreclosure and the property then be resold. Does that resale not determine the value of the property and the loss on the original mortgage (and therefore any securities tied to that mortgage).

There is a big part of me that wants everyone who got us into this mess to feel serious pain, but I don't know if that is going to get us much. I do believe there has to be some short term intervention, but I'm not sure it needs to be as large as Paulson wants.

We need to grow ourselves out of this problem. We need to address federal spending, address major regulatory chokepoints, streamline our tax system and alter our energy policies so that we get the majority of our energy needs at home and stop sending our money overseas.

Posted by remoteman 2008-09-23 13:17|| 2008-09-23 13:17|| Front Page Top

#9 One problem America has had since the 50s was mobility. People stayed with jobs for a short period of time than found a better paying one. Stayed in a house for a short period of time, then found a bigger one.

There was no real permanence built into the lifestyle the way it was in the past which just adds to the loss of community so many feel. At least outside of small town America.

Posted by rjschwarz 2008-09-23 14:24|| 2008-09-23 14:24|| Front Page Top

#10 I have to disagree with you TW, about your assessment of James' link: the "theology" professor is engaging in "joint and several" morality, that substitutes "did you profit?" in place of "what did you do?" This inverts cause (what did you do) with effect (did you profit)? Once the inversion is made, he then tries to scrape up ANY evidence of any unintended incidental profit as proof of "guilt".

Posted by Ptah">Ptah 2008-09-23 14:43|| http://www.crusaderwarcollege.org]">[http://www.crusaderwarcollege.org] 2008-09-23 14:43|| Front Page Top

#11 Rush is only half right, remoteman. I believe there is enough blame to cover both sides of the aisle. Notice how they are all keeping their mouths shut and going along with the bailout.

Posted by Ebbang Uluque6305 2008-09-23 14:55|| 2008-09-23 14:55|| Front Page Top

#12 Except that it was intentional profit, Ptah, and intent precedes and informs action. Or at least it was intended to be intentional profit. :-( I am jointly culpable in that I chased higher returns on my investments, and if I did not know how they were achieved nor whether the AAA ratings were valid, it is because I did not ask.

Posted by trailing wife ">trailing wife 2008-09-23 15:43|| 2008-09-23 15:43|| Front Page Top

#13 I will leave it to the forensic financial accountants (yes, there are such animals) to do the reverse engineering on this fiasco but there is one thing that sticks out big time - Congress telling Fannie Mae and Freddie Mac to get more progressive in servicing high risk economic demographics. And if this turns out to be racial so be it. But it is fact and it is traceable. Not that it alone created the short term capital problem but I would love to see a detailed accounting of each "toxic" asset or mortgage that is being bought. I want to know where it is, who applied for it, what documentation was used as to its credit and ability to pay. That is why, my friends, that International ANSWER and the commies and pinkos and their enablers who ignited this mess during the Clinton years don't want a bailout for the holders since it is their paper and too revealing.

Posted by Jack is Back!">Jack is Back! 2008-09-23 16:29|| 2008-09-23 16:29|| Front Page Top

#14 Congress telling Fannie Mae and Freddie Mac to get more progressive in servicing high risk economic demographics

I'm not certain about other regions, but this is precisely the case in and around Atlanta. And it isn't even close to subtle. Economic barriers had prevented the movement of traditionally lower income, Fulton county residents to the suburbs. Within the last few years developers have broken the code on low and no down-payment, easy qual, flexible interest housing (walk-away) loans and the rush to the $500-$700K 5 bedroom, 4 bath was on. In areas hardest hit, school systems became flooded with diversity and it's accompanying challenges. Schools and communities which were previously highly sought are now avoided and surrounding property values have fallen. Greedy developers, Fannie and Freddie, political kickbacks all working hand-in-hand. Our socialist government at work. It is what it is.

Posted by Besoeker 2008-09-23 17:16|| 2008-09-23 17:16|| Front Page Top

#15 CNBC + CNN this AM > Guest Perts - ONE WAY OR ANOTHER, DIRECTLY OR INDIR, THE US TAXPAYER WILL BE PAYING FOR THE BAILOUT + GIVING/PAYING OUT MORE TO THE USG PER ROUTINE PAYCHECK, ETC. AS A CONSEQUENCE.

Posted by JosephMendiola 2008-09-23 20:39|| 2008-09-23 20:39|| Front Page Top

23:48 CrazyFool
23:37 JosephMendiola
22:57 Gerthudion Glaith5839
22:56 Ho Chi Hupailing9508
22:51 OldSpook
22:32 Abdominal Snowman
22:22 bigjim-ky
22:10 Chuck Simmins
21:59 JosephMendiola
21:58 OldSpook
21:52 Ricky bin Ricardo (Abu Babaloo)
21:43 JosephMendiola
21:39 3dc
21:36 JosephMendiola
21:29 JosephMendiola
21:22 Free Radical
21:15 JosephMendiola
21:07 JosephMendiola
21:07 Besoeker
21:06 Ptah
21:02 Red Dawg
20:53 JosephMendiola
20:50 Old Patriot
20:49 Red Dawg