Our financial system is crumbling this week.

[lukethedrifter]

Our government [expletive] sucks. At this point, I prefer anarchy, because anarchy cannot run up huge deficits and lie about it.

The government uses a cash based accounting but also runs forecasts to project future financial status. I don't think that is "lying". Furthermore, most of the projected deficits are due to rapidly increasing health care costs which will make Medicare much more expensive. Of course, these costs would be highly damaging to rest of the economy including private employers who buy health plans. The real problem is the massive inefficiency of our private health care system not the government.

Jim Cooper says the Gov't is lying by omission.

[Freed Roger]

Did I hear this correctly?

Paulson said they aren't going to even bother buying the troubled assets which caused this mess in the first place. Instead, they are just going to inject capital into businesses that need it? Well, at least we'll have something to show for the money then. Wait. No. No. [expletive]. This is a [expletive] handout w no strings whatsoever attached. It's a [expletive] joke is what it is.

I share you guys pain - they seem clueless on what to do so they just continue to throwing $$$ at the problem, which will eventually go down the pissah. trillion dollars worth of short term band aids to shore up the leaking dam.

Now even more plans to throw money onto the sinking ships like auto mfgs, and potentially another round of rebate checks to Americans. Mortgage relief. Yikes. To me, that just seems like we're prolonging the pain.

Where are the long-term thinkers ?

[Arthur Dent]

Jim Cooper says the Gov't is lying by omission.

The forecasts are publicly available, and there have been endless newspaper articles on this topic, although many misattribute the problem to Social Security (which is essentially fine) instead of the health care system.

[AWvsCBsteeeerike3]

I share you guys pain - they seem clueless on what to do so they just continue to throwing $$$ at the problem, which will eventually go down the pissah. trillion dollars worth of short term band aids to shore up the leaking dam.

Now even more plans to throw money onto the sinking ships like auto mfgs, and potentially another round of rebate checks to Americans. Mortgage relief. Yikes. To me, that just seems like we're prolonging the pain.

Where are the long-term thinkers ?

I've gotten passed my initial anger at the 1) passing of this and 2) wasteful use of the appropriations. However, the original plan, and the way it was sold to the public was the feds were going to purchase the troubled assets the banks didn't want.

Okay, that's fine. The feds buy the bad assets, the ugly numbers come off the books and the banks are free again to lend money to worthy investors. The gov. at least is buying something (in this case largely bad mortgages) and will see some sort of return. When you think about it, what is likely to happen is the gov ends up with a large number of houses that have been foreclosed on. They then sell them to extremely successful businessmen who in turn sell them back to the public. Okay, the government employees are going to get slaughtered by the businessmen, but at least you've got something to show for your trouble.

Not now. The 700 billion that was going to purchase the bad assets (mortgages/houses that would have given a return) is now being doled out for nothing. There will be no return. It's passed off as no big deal/business as normal when in fact it is flat out stealing.

[expletive] them.

Edit: Even if they get 10 cents on the dollar return, that is enough to pay for Obama's healthcare plan. This flat out not getting a return should have everyone so up in arms that they are ready to march on Washington, armed (before Obama takes them all away) *ducks*

[Arthur Dent]

The 700 billion that was going to purchase the bad assets (mortgages/houses that would have given a return) is now being doled out for nothing. There will be no return.

This is not true. The government bought preferred shares in the banks. As long as the banks don't go under, they will see a return. The scandal has been that banks have been paying bonuses and issuing dividends rather than loaning the money as they should have been required to do.

[AWvsCBsteeeerike3]

The 700 billion that was going to purchase the bad assets (mortgages/houses that would have given a return) is now being doled out for nothing. There will be no return.

This is not true. The government bought preferred shares in the banks. As long as the banks don't go under, they will see a return. The scandal has been that banks have been paying bonuses and issuing dividends rather than loaning the money as they should have been required to do.

Good. Now I don't have to march on washington.

So does buying preferred stocks mean they buy them directly from the bank, thus infusing the bank with money? I've never really understood how that works....

Thanks for clarifying

[Arthur Dent]

So does buying preferred stocks mean they buy them directly from the bank, thus infusing the bank with money? I've never really understood how that works....

Yep. That's the idea.

[Freed Roger]

I've gotten passed my initial anger at the 1) passing of this and 2) wasteful use of the appropriations. However, the original plan, and the way it was sold to the public was the feds were going to purchase the troubled assets the banks didn't want.

Okay, that's fine. The feds buy the bad assets, the ugly numbers come off the books and the banks are free again to lend money to worthy investors. The gov. at least is buying something (in this case largely bad mortgages) and will see some sort of return. When you think about it, what is likely to happen is the gov ends up with a large number of houses that have been foreclosed on. They then sell them to extremely successful businessmen who in turn sell them back to the public. Okay, the government employees are going to get slaughtered by the businessmen, but at least you've got something to show for your trouble.

[expletive] them.

I've heard the definitive "This American Life" programs on the best bailout approach and the experts interviewed felt the bailout should go as capital injection in return for preferred stock. This sort of makes more sense than the open-ended buying of junk mortgages/assets for which no value can be ascertained.

My worry with the capital injection/preferred stock plan is that the govt can't really exert power over these new investments in Financial Cos and Auto Mfgs. Its not like this govt investment is akin to Warren Buffett buying equity ownership in GE - because GE was just undervalued, but not a sinking ship. Buffett wouldn't buy.. say a Merrill Lynch or a GM etc because he has a enough sense to know they are bad investments. US Govt is paying top-dollar for at a fire-sale.

Plus Buffett can and will force GE to make changes and have say-so in decisions that will make the company more profitable. Since the US is govt, it can't do the same, they really will just be putting money in and praying it works.

[Arthur Dent]

Since the US is govt, it can't do the same, they really will just be putting money in and praying it works.

They can, but have just been unwilling to do so I guess because that would be "socialism", although I think it would just be protecting the public interest.

[AWvsCBsteeeerike3]

So does buying preferred stocks mean they buy them directly from the bank, thus infusing the bank with money? I've never really understood how that works....

Yep. That's the idea.

So, the banks worth doesn't really go up, they just trade in some of their equity for cash? That seems like a pretty good idea. See, i was all worked up for nothing.

Now I'm back to being mad that they were giving out bonuses and paying dividends with the bailout money.