$700 Billion Bailout: See no evil. Hear no evil. Speak no evil. (UPDATED)

 

 

UPDATE:  Reason Magazine has some interesting interviews where some free market economists weigh in on Paulson’s plan.

As Congress and President Bush set to “hammering out the details” of a proposed $700 billion bailout for investment banks, reason asked free-market-friendly economists three pressing questions: How bad is the current market situation?; how bad are the current proposed bailout plans?; and what’s the one thing we should be doing that we’re not?

Most of it is in written form.  But, one of them is in video format.

H/T to Rick Moran at Right Wing Nut House, who, strangely, seems to be for the bailout. 

I am forced to the conclusion that without this bailout, havoc would ensue and we might very well have a serious contraction of the economy with the result being the end of the US as a economic powerhouse for the foreseeable future.

I know.  I was surprised at too.  😯

Indeed, “thrift is dead.”

Anyhow, Senators Harry Reid and Chris Dodd blame John McCain and Chuck Schumer says McCain needs to “get out of town.” 

Luckily, Harry Reid’s attempt to slip the oilshale ban into this bailout fiasco din’t make it. 

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UPDATE:  It looks like ACORN may be getting ready to feed at the bailout trough.  Up to 20% of the so-called “profits” from the sale of assets by the Treasury? 

But, ACORN has been keeping busy with a little protesting and, maybe, a little fraud, while waiting on their next government handout.  Yes.  I said “fraud“.  It’s not like it’s the first time we’ve heard something about ACORN and election fraud, now, is it?

I told you before – “Don’t try to tell me they wouldn’t play politics with this issue.”  However, they can try to lard up something in D.C., they will.  Oh.  And, “they”, is not just one party or the other.  It’s pretty much an all-inclusive term.  But, one side of the “family” probably is more at fault in this whole mess than the other.  But, there is plenty of blame to go around. 

Here’s video of the CEO of Fannie Mae in 2005 calling Barack Obama and Democrats the “family” and “conscience” of Fannie Mae….

Don’t worry about the link.  Here’s the video for you to look at:

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Others posting on this topic:  Pocket Change – Now Lint Free!, Hyscience, NObama – Not Now, Not Ever, An Ol’ Broad’s Ramblings, Elephant Owners, Webloggin, silent E speaks – Conservatively Speaking from Western Waukesha County, Texas Hill Country, Road Sassy, Cinie’s World, PrestoPundit, The Other McCain, Blog @ MoreWhat.com, Hot Air, Right Wing Nation, Are We Lumberjacks?, doggle, Radio Vice Online, The TIW Blog, Jules Crittenden, Swamp Hermit’s *QUICK* Bits, Riggword Weblog, I Took The Red Pill, Hot Air, Internet Scofflaw, Protein Wisdom, Dr. Melissa Clouthier, Blogs For John McCain’s Victory, Grizzly Groundswell, Mcnorman’s Weblog, MyCoupons.com Shopping Boards, Right Wing Nut House, MyCoupons.com Shopping Boards, Sanity Injection, Cinie’s World

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UPDATE:  Paulson’s still pushing his bailout plan to Capitol Hill lawmakers tonight.  They may be in for an all-nighter.  I hope there are some fiscal conservatives up there trying to keep the liberals from slipping some more of those designer organic meals for Berkeley schools and the like into what they are trying to do in D.C., like they did the monsterous omnibus bill.  Heck.  Harry Reid’s already been trying to slip a new oilshale ban into it.  No kidding.  Don’t try to tell me they wouldn’t play politics with this issue.  🙄

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UPDATE: You had better call your elected representatives in D.C. to make your voice heard on the bailout debacle, before this juggernaut picks up too much speed.

I keep trying to see it from their perspective but I’m not much of a contortionist.  😉

Here’s the number to call: 202-224-3121

What are you waiting for?  Call!

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Bush, McCain and Obama coming together with the likes of Pelosi and Reid for a meeting of the minds on the bailout?  There has to be a joke in there somewhere.  Don’t ya think?

Are there any fiscal conservatives left in America?  It looks like there might be, maybe, even more than one.

Do you trust Treasury Secretary Henry Paulson with the $700 billion for which they are asking, including for foreign banks?  I don’t know that I do.

I just wish that people would talk straight about it and quit telling us lies to try to win us to their side.

What else will they try to slide into this bailout proposal – Student Loans, car debt, etc.?  Who else is looking to get on the public dole?

Former Speaker of the House, Newt Gingrich, thinks its time to kill the bill for the $700 billion bailout. 

You know there is a side of this that no one, on either side of the political divide, seems to want to talk about being a contributing factor to the banking mess, right?  Illegal immigration. 

Illegal immigration and the mortgage mess
by Michelle Malkin
Creators Syndicate
Copyright 2008

The Mother of All Bailouts has many fathers. As panicked politicians prepare to fork over a trillion dollars in taxpayer funding to rescue the financial industry, they’ve fingered regulation, deregulation, Fannie Mae and Freddie Mac, the Community Reinvestment Act, Jimmy Carter, Bill Clinton, both Bushes, greedy banks, greedy borrowers, greedy short-sellers, and minority home ownership mau-mauers (can’t call ‘em greedy, that would be racist) for blame.

But there’s one giant paternal elephant in the room that has slipped notice: How illegal immigration, crime-enabling banks, and open-borders Bush policies fueled the mortgage crisis…(read more)

 Sen. McCain suspends his campaign to return to Washington to vote.  Sen. Obama…..well, I’m not sure what Obama is doing in response to this, other than continuing to campaign.  He did make a nice joint statement with McCain.  🙄

What should President Bush have said at 9:01pm (EST) last night?  Note I said “should” have said. 

What did he say?  “I’m a strong believer in free enterprise.”  ROFL

Well, that was part of what he said and I like to have fallen out of my seat laughing, when I heard him say that, along with the rest of his speech pushing for the close to $1 trillion bailout.  😯

ADDRESS BY THE PRESIDENT TO THE NATION
State Floor
9:01 P.M. EDT

THE PRESIDENT: Good evening. This is an extraordinary period for America’s economy. Over the past few weeks, many Americans have felt anxiety about their finances and their future. I understand their worry and their frustration. We’ve seen triple-digit swings in the stock market. Major financial institutions have teetered on the edge of collapse, and some have failed. As uncertainty has grown, many banks have restricted lending. Credit markets have frozen. And families and businesses have found it harder to borrow money.

We’re in the midst of a serious financial crisis, and the federal government is responding with decisive action. We’ve boosted confidence in money market mutual funds, and acted to prevent major investors from intentionally driving down stocks for their own personal gain.

Most importantly, my administration is working with Congress to address the root cause behind much of the instability in our markets. Financial assets related to home mortgages have lost value during the housing decline. And the banks holding these assets have restricted credit. As a result, our entire economy is in danger. So I’ve proposed that the federal government reduce the risk posed by these troubled assets, and supply urgently-needed money so banks and other financial institutions can avoid collapse and resume lending.

This rescue effort is not aimed at preserving any individual company or industry — it is aimed at preserving America’s overall economy. It will help American consumers and businesses get credit to meet their daily needs and create jobs. And it will help send a signal to markets around the world that America’s financial system is back on track.

I know many Americans have questions tonight: How did we reach this point in our economy? How will the solution I’ve proposed work? And what does this mean for your financial future? These are good questions, and they deserve clear answers.

First, how did our economy reach this point?

Well, most economists agree that the problems we are witnessing today developed over a long period of time. For more than a decade, a massive amount of money flowed into the United States from investors abroad, because our country is an attractive and secure place to do business. This large influx of money to U.S. banks and financial institutions — along with low interest rates — made it easier for Americans to get credit. These developments allowed more families to borrow money for cars and homes and college tuition — some for the first time. They allowed more entrepreneurs to get loans to start new businesses and create jobs.

Unfortunately, there were also some serious negative consequences, particularly in the housing market. Easy credit — combined with the faulty assumption that home values would continue to rise — led to excesses and bad decisions. Many mortgage lenders approved loans for borrowers without carefully examining their ability to pay. Many borrowers took out loans larger than they could afford, assuming that they could sell or refinance their homes at a higher price later on.

Optimism about housing values also led to a boom in home construction. Eventually the number of new houses exceeded the number of people willing to buy them. And with supply exceeding demand, housing prices fell. And this created a problem: Borrowers with adjustable rate mortgages who had been planning to sell or refinance their homes at a higher price were stuck with homes worth less than expected — along with mortgage payments they could not afford. As a result, many mortgage holders began to default.

These widespread defaults had effects far beyond the housing market. See, in today’s mortgage industry, home loans are often packaged together, and converted into financial products called “mortgage-backed securities.” These securities were sold to investors around the world. Many investors assumed these securities were trustworthy, and asked few questions about their actual value. Two of the leading purchasers of mortgage-backed securities were Fannie Mae and Freddie Mac. Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk.

The decline in the housing market set off a domino effect across our economy. When home values declined, borrowers defaulted on their mortgages, and investors holding mortgage-backed securities began to incur serious losses. Before long, these securities became so unreliable that they were not being bought or sold. Investment banks such as Bear Stearns and Lehman Brothers found themselves saddled with large amounts of assets they could not sell. They ran out of the money needed to meet their immediate obligations. And they faced imminent collapse. Other banks found themselves in severe financial trouble. These banks began holding on to their money, and lending dried up, and the gears of the American financial system began grinding to a halt.

With the situation becoming more precarious by the day, I faced a choice: To step in with dramatic government action, or to stand back and allow the irresponsible actions of some to undermine the financial security of all.

I’m a strong believer in free enterprise. So my natural instinct is to oppose government intervention. I believe companies that make bad decisions should be allowed to go out of business. Under normal circumstances, I would have followed this course. But these are not normal circumstances. The market is not functioning properly. There’s been a widespread loss of confidence. And major sectors of America’s financial system are at risk of shutting down.

The government’s top economic experts warn that without immediate action by Congress, America could slip into a financial panic, and a distressing scenario would unfold:

More banks could fail, including some in your community. The stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet. Foreclosures would rise dramatically. And if you own a business or a farm, you would find it harder and more expensive to get credit. More businesses would close their doors, and millions of Americans could lose their jobs. Even if you have good credit history, it would be more difficult for you to get the loans you need to buy a car or send your children to college. And ultimately, our country could experience a long and painful recession.

Fellow citizens: We must not let this happen. I appreciate the work of leaders from both parties in both houses of Congress to address this problem — and to make improvements to the proposal my administration sent to them. There is a spirit of cooperation between Democrats and Republicans, and between Congress and this administration. In that spirit, I’ve invited Senators McCain and Obama to join congressional leaders of both parties at the White House tomorrow to help speed our discussions toward a bipartisan bill.

I know that an economic rescue package will present a tough vote for many members of Congress. It is difficult to pass a bill that commits so much of the taxpayers’ hard-earned money. I also understand the frustration of responsible Americans who pay their mortgages on time, file their tax returns every April 15th, and are reluctant to pay the cost of excesses on Wall Street. But given the situation we are facing, not passing a bill now would cost these Americans much more later.

Many Americans are asking: How would a rescue plan work?

After much discussion, there is now widespread agreement on the principles such a plan would include. It would remove the risk posed by the troubled assets — including mortgage-backed securities — now clogging the financial system. This would free banks to resume the flow of credit to American families and businesses. Any rescue plan should also be designed to ensure that taxpayers are protected. It should welcome the participation of financial institutions large and small. It should make certain that failed executives do not receive a windfall from your tax dollars. It should establish a bipartisan board to oversee the plan’s implementation. And it should be enacted as soon as possible.

In close consultation with Treasury Secretary Hank Paulson, Federal Reserve Chairman Ben Bernanke, and SEC Chairman Chris Cox, I announced a plan on Friday. First, the plan is big enough to solve a serious problem. Under our proposal, the federal government would put up to $700 billion taxpayer dollars on the line to purchase troubled assets that are clogging the financial system. In the short term, this will free up banks to resume the flow of credit to American families and businesses. And this will help our economy grow.

Second, as markets have lost confidence in mortgage-backed securities, their prices have dropped sharply. Yet the value of many of these assets will likely be higher than their current price, because the vast majority of Americans will ultimately pay off their mortgages. The government is the one institution with the patience and resources to buy these assets at their current low prices and hold them until markets return to normal. And when that happens, money will flow back to the Treasury as these assets are sold. And we expect that much, if not all, of the tax dollars we invest will be paid back.

A final question is: What does this mean for your economic future?

The primary steps — purpose of the steps I have outlined tonight is to safeguard the financial security of American workers and families and small businesses. The federal government also continues to enforce laws and regulations protecting your money. The Treasury Department recently offered government insurance for money market mutual funds. And through the FDIC, every savings account, checking account, and certificate of deposit is insured by the federal government for up to $100,000. The FDIC has been in existence for 75 years, and no one has ever lost a penny on an insured deposit — and this will not change.

Once this crisis is resolved, there will be time to update our financial regulatory structures. Our 21st century global economy remains regulated largely by outdated 20th century laws. Recently, we’ve seen how one company can grow so large that its failure jeopardizes the entire financial system.

Earlier this year, Secretary Paulson proposed a blueprint that would modernize our financial regulations. For example, the Federal Reserve would be authorized to take a closer look at the operations of companies across the financial spectrum and ensure that their practices do not threaten overall financial stability. There are other good ideas, and members of Congress should consider them. As they do, they must ensure that efforts to regulate Wall Street do not end up hampering our economy’s ability to grow.

In the long run, Americans have good reason to be confident in our economic strength. Despite corrections in the marketplace and instances of abuse, democratic capitalism is the best system ever devised. It has unleashed the talents and the productivity, and entrepreneurial spirit of our citizens. It has made this country the best place in the world to invest and do business. And it gives our economy the flexibility and resilience to absorb shocks, adjust, and bounce back.

Our economy is facing a moment of great challenge. But we’ve overcome tough challenges before — and we will overcome this one. I know that Americans sometimes get discouraged by the tone in Washington, and the seemingly endless partisan struggles. Yet history has shown that in times of real trial, elected officials rise to the occasion. And together, we will show the world once again what kind of country America is — a nation that tackles problems head on, where leaders come together to meet great tests, and where people of every background can work hard, develop their talents, and realize their dreams.

Thank you for listening. May God bless you.

As nice as it would be to be able to blame all of the stuff leading up to this bailout mess at the feet of the likes of Jimmy Carter, Jesse Jackson, etc., we can’t.  Responsibility lies on both sides of the political divide, including with the current administration.  Sorry.  But, it had to be said.  It’s just “an inconvenient truth.”

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Others posting on this the bailout topic: BigMouthFrog, Jules Crittenden, The Other McCain, Political Byline, Webloggin, Badger Blogger, Bloodthirsty Liberal, Putting Country First., Nicholas Fitzgerald, Stuck On Stupid, The Other McCain, Pursuing Holiness, Stop The ACLU, Mcnorman’s Weblog, The Sadim Touch, David’s Blog of Common Sense, Quipster, Bride of Rove, Think Tankers, Tai-Chi Policy, C-SPAN: Debate Hub, Beltway Snark, Pocket Change – Now Lint Free!, Nice Deb, Cold Fury, Faith and Facts, Riggword Weblog, No Man’s Blog

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Tags: $700 billion bailout, ACORN, Barack Obama, Election '08, Fannie Mae, Freddie Mac, George Bush, John McCain

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