If the bailout doesn’t happen, I will probably lose money. However, I am still not in favor of the proposed bailout. Why? Because I would rather lose money over the next 3 or 4 years in order to keep my country strong over the next 10 to 50. The last time we heard this much talk about the bad things that would happen if we did nothing, we went to war in Iraq. It now seems that the “bad stuff” that was suppose to happen if we didn’t go to war was overrated and based on faulty information. My guess is that this is happening again.
It seems to me that the long term damage from a bailout is likely to be worse than the shorter term damage (if any) of not passing the bailout. But what do you think? Are you for the bailout or against it?
Either way, I’d encourage you to let your representative know how you feel. My representative said she was blown away by how many people were contacting here about this. She wasn’t use to getting this many personal messages on any topic.
Mark,
You’ve got this wrong. This isn’t Bush trumping up a war, its a financial crisis.
You must read this article at the NYTimes:
http://www.nytimes.com/2008/10/01/opinion/01friedman.html?em
This is a harsh critic of the Bush admin saying we need this rescue.
Excerpt:
“This is a credit crisis. It’s all about confidence. What you can’t see is how bank A will no longer lend to good company B or mortgage company C. Because no one is sure the other guy’s assets and collateral are worth anything, which is why the government needs to come in and put a floor under them. Otherwise, the system will be choked of credit, like a body being choked of oxygen and turning blue.
Well, you say, “I don’t own any stocks — let those greedy monsters on Wall Street suffer.” You may not own any stocks, but your pension fund owned some Lehman Brothers commercial paper and your regional bank held subprime mortgage bonds, which is why you were able refinance your house two years ago. And your local airport was insured by A.I.G., and your local municipality sold municipal bonds on Wall Street to finance your street’s new sewer system, and your local car company depended on the credit markets to finance your auto loan — and now that the credit market has dried up, Wachovia bank went bust and your neighbor lost her secretarial job there.
We’re all connected. As others have pointed out, you can’t save Main Street and punish Wall Street anymore than you can be in a rowboat with someone you hate and think that the leak in the bottom of the boat at his end is not going to sink you, too. The world really is flat. We’re all connected. “Decoupling” is pure fantasy”.
With the rescue package we may still be headed to the Great Depression 2.0. Without it we would definitely be headed there.
Well, I’m not an American citizen, but I guess the financial crisis is going to hit me in Scandinavia too. The bailout of irresponsible banks is not a very good idea. Regulation and intervention is the cause of the current crisis. The artificially low interest rate upheld by the FED and the Community Reinvestment Act are the prime reasons why we have this mess today.
Depression is basically a sound procces, in which the market recovers. For that reason, it’s better to take the blow now than prolonging it by intervening in the market like the House, Senate and President seem inclined to do right now. Instead, let it hurt really bad now, instead of dealing with the headache for decades to come.
Now, I think we live in times when regulatory and interventionist policies are “á la mode”, so there will surely come an ugly recession around the corner.
Sweden, where I live, have tried market intervention on numerous occasions before. It always ends up in problems. Yet, the socialists in charge over here think that their very own regulations have nothing to do with negative business cycles. Pathetic…
Oh, and did I mention I HATE the quasi-socialism applied here in Europe (and especially in Sweden)? The financial crisis is NOT a faliure of capitalism, it’s the faliure of market interventions. But people will never realise that, especially amidst the extreme panic of economic crisis.
You made an extremely important point in your “math impaired” post (on August 21st): why didn’t people do their simple math at the kitchen table? Since market economy is based on voluntary agreements between consumers and producers, they both share the blame, equally.
I am adamantly against the bailout. Bush has failed at everything he’s ever done, and every single time someone came along and bailed him out and he suffered no consequences. That’s why he thinks it’s the only way out of this mess.
The plan is being rushed through without anywhere near the amount of time necessary to craft a CAREFUL plan for economic recovery. There’s no oversight and nobody keeping an eagle eye on where the money goes. There are no financial consequences for the people who brought this whole mess about. And it is absolutely astonishing to see a buch of alleged “conservatives” push so hard for what amounts to nationalization–the kind of “socialism” they rail against when other countries do it.
Let’s take time and let people who know what they’re doing figure out the best course of action. Let’s not leave it to a bunch of grandstanding politicians who aren’t going to be hurt no matter what happens (with the possible exception of getting voted out of office for making things worse).
I’m against it.
I am still against the bailout. Like Mark, I will probably lose money in the short term which is unfortunate but still ok with me because the cost of short-term fixes always come due when you’re least prepared. I have written to my Senator and Congressman. Here’s what I wrote:
Dear Senator:
Please vote No for the Housing and Economy Recovery Act as it is in every version made public through today October 1, 2008. Here’s why:
1. Warrants are derivatives and they expire. I don’t want taxpayers’ warrants on the companies to expire worthless.
2. What are the “other assets” which this bill enables the purchase of from financial institutions?
3. What is “mortgage credit” and why is it meaningful to every American?
4. FDIC insurance does not need to be raised for at least two very good reasons. 1. Raising insurance protection from $100,000 only help accounts with at least $100,000 in one bank account. I’m not certain this includes many “middle class” people. 2. If an account holder desires more assets to be insured, the account holder can open an account at another bank, or use several other existing measures to substantially raise their security.
5. What is the “National Affordable Housing Trust Fund” and who will have oversight authority for it?
Thank you for reading Senator
Any reader is welcome to use my draft in their own letters to their representatives.
Hej do Chris. Jag taller inte Svenska, so I’m glad you wrote that in English. I lived in Holsbybrunn for a year and visited a lot of Skandinavia while I was there. It’s sad that the average Swede could explain and discuss the American economy more intelligently than the average American.
Mark,
I agree with you. In the interest of full disclosure, I support the Iraq war. I have very strong disagreements with how it’s been carried out, but I continue to support the premise. In fact, I support most of what President Bush has done, but I think this bailout bill is an absolute nightmare. I have no idea why he is supporting this crackpot idea. I disagree with everything he’s said about this issue. Forgive me for sounding simplistic, but I think he needs to watch It’s a Wonderful Life. The people who did fine were the people who didn’t panic. George Bush could learn a few things from George Bailey. Stop panicking. Be wise.
I think the most alarming part of your post, though, was the last sentence. Our representatives need to hear from us a whole lot more than they do. Regardless of what happens with this bill, I hope that this becomes the norm rather than the surprise exception.
@Ed – My point with the war is that the information that was used to convince Congress to vote for it is now said to be false. This doesn’t necessarily mean that the war wasn’t justified. It does point out that Congress needs to make sure they are operating with good information before spending hundreds of billions of dollars on something.
What exactly was it that was false in your opinion? Let’s rehash the whole damn thing again. You and everyone else seems to forget right up to the very point Bush put troops into Kuwait Demochimps and other lower forms of life like French were for action against Iraq. No, your opposition like theirs was/is based on political ideology. It’s always Ideology before reality, Ideology before truth, Ideology before country. “1984” is the only way to explain such radical change of support from one day to the next.
Next thing you’ll be doing is telling us how Clinton, Dem congress, Frank/Dodd/etc., had nothing to do with this bailout. That it was McCain the “deregulator” who cause (somehow not explained) that caused this problem when in FACT the opposite is true. McCain attempted to reregulate the deregulation (or the relaxation of) Freddie and Fannie by Dems.
@Bosco – The information that was presented to congress that caused them to vote for the war was later found out to be incorrect. My point isn’t whether or not going to war was a good idea, but just pointing out that Congress needs to make sure they have their facts straight when voting to spend hundreds of billions of dollars.
It seems to be me that everyone in congress is taking the word of a small group of people that this bailout will prevent disaster. My concern is that they will spend all this money and 5 years from now say, “Oh, you know that wasn’t such a good idea.”
Regarding “1984”, if I tell you “because of A we need to do B” and get you to agree and later come back and say “A was false” it stands to reason that your support of B may flip flop. If I say, “your are is infected and it is spreading therefore we need to amputate,” you might agree with me. However, it makes sense that you’d change your mind if I come back and say, “your arm isn’t infected”. This doesn’t require any Orwellian conspiracy.
I don’t care if someone is a Democrat or Republican. In fact I think part of the problems we have are caused by a two party system where the members of congress vote for things based on which party wrote the legislation instead of what is best for the country.
My opposition to the bill (which passed) was based on the belief that the government is better off letting the markets correct themselves and not saddling the country with more debt. I also believe that if the traditional credit markets freeze up, others will take its place. The US still has enough money to go around and for businesses to thrive–even if not as much of it is at traditional banks.
So yes, this is based on ideology. I have the idea that throwing more money at a problem rarely makes things better. I have the idea that spending more than you can afford generally causes problems in the future. I have the idea that the markets in America were designed to run with minimal interference from the government. I have the idea that when investors start moving money around to take advantage of the fact that the government is going to spend $700B to rescue failing businesses, they stop investing based on fundamentals and this endangers the economy.
I also believe that in many cases the things the need for government regulation in one area is caused by regulation in another area. This isn’t always the case, but regulating business has a domino effect. You fiddle with things here and as a result you have to fiddle with things over there, etc.
These are some of my ideal. Looking at history I see that when they are followed (regardless of what party is behind it) things seem to work well for the country. I am completely aware that others may look at history and draw different conclusions.