No wonder socialism doesn't work! It always involves losing money.

In addition to the Bear-Stearns bailout, the Fed also made an unprecedented weekend rate cut (of 0.25%). More is on the way.

More "who benefits" here:
http://jessescrossroadscafe.blogspot.com/
"Fed Creates the Dealer's Dole, Affirms Crony Socialism"

and here:
http://globaleconomicanalysis.blogspot.com/
"One thing is for certain, Bear Stearns PUT buyers are going to be celebrating Monday."

Kevin, why are you even a little skeptical of this? Anyone with sense realizes that
a) a home 'investment' with negative equity means you should get out. That's what everybody does with bad investments.
b) The bank should take a loss. The bank was either stupid or venal or both in making the loan.
c) Any bailout of a 'negative equity' loan does not help the borrower, only the lender.

Seeing the moral hazard is as easy as a, b, c.

Count me in the "duh!" camp. The end game is to have the taxpayer pick up the bill. Not only do we get trillions of dollars of debt from the Bush adventure in Iraq, we also get to subsidize a bunch of millionaire investors to the tune of another couple trillion dollars.

Kevin,

It appears to me that the Fed is trying to do triage on the financial system, with the hope that working proactively now will save things later. (Remember that Bernanke has studied the Great Depression and does not want to repeat the mistakes the Fed made after 1929.) In the process, however, a lot of wealthy folks who should have taken some huge losses will be bailed out. Having been bailed out, they will be more likely to try this stuff again.

Having said that, however, it has been reported that as much as one-third of the stock in Bear Stearns was held by Bear Stearns employees. So they may have taken substantial losses, depending on how well they diversified their wealth holdings. (Should we cry for them? The average Bear Stearns employee reportedly earned $242,000 last year.)

Finally, despite the fact that I do not agree with Paul Krugman on the Presidential race, I will be interested to see what he has to say this week about this.

Yeah, it's not like anything like this has ever happened before (S&Ls).

These guys are all in favor of "free markets, completely unfettered by government interference or regulation" up until the precise moment their neck ends up in the noose thanks to reckless behavior and the trouble it got them into while they were going about their business unregulated by government...at which point government interference is not only welcome, but required. Once the bailout is accomplished, they go back to singing the same song about how they should be "unmolested" by government, because clearly they are so trustworthy.

We've been playing this same song and dance for 30 years now...privatize the profits...socialize the risk...

This scares me more:

"The speed of the slide in the dollar/yen is so rapid that U.S. action alone can no longer stop the dollar's downward trend," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investment. "The time is ripe for coordinated intervention by U.S., European and Japanese authorities."

However:

"But for this to be taking place in the context of a financial apocalypse among the American middle class (9m families currently have negative equity in their homes, and prices in all likelihood have much further to fall)"

I'm not suprised 9 million people like me who brought houses are screwed, but they had to be hurting a long time ago to have no equity now. Its just that the BANKS are getting hit now, that defines it as a "middle class apocalypse"? Because there is no more blood to be sucked?

We've been playing this same song and dance for 30 years now...privatize the profits...socialize the risk...

Exactly. Every single free market evangelist I've ever run across pulls this same number. It's all Free Market! Free Market! Right up until it's their ox being gored, then the tune abruptly changes. Anyone who actually believes in a free market would be sitting there right now going "Whelp. They gambled and lost. Their problem."

Where's the outrage indeed? It was a record year for bonuses that were paid only 2-3 months ago. Think about it. Pretty much every executive on Wall Street knew 3 months ago that 2008 was going to be a rough year, with a chance that things would go south really badly, but they still paid out multi-billion dollar bonuses.

Apparently the Fed can do whatever it wants when its a national crisis. I think the least it can do it freeze the bank accounts of the top 100 hundred bonus earners of all those primary dealers it is not bailing out, with the thought of taking back that money. It should do so now. A system without a founding in some kind of morality will collapse.

"Why aren't the Democrats demanding the re-regulation of Wall Street and the reining in of compensation in the finance industry as quid pro quo for these bailouts?"

Because, those bankers and banks took that money and bought, congressmen, senators, Bush and the candidates for president. Isn't it obvious?

arteclectic:
Anyone who actually believes in a free market would be sitting there right now going "Whelp. They gambled and lost. Their problem."

I am saying exactly that. There are many who choose to walk away from their homes when they're upside down - and to that, I say to the banks: You idiots got exactly what you deserve (by giving loans to people who clearly couldn't afford it for a home that clearly has an inflated price).

Just walk away..

You idiots got exactly what you deserve

But the problem is that as this unfolds it can hurt a lot of people who didn't participate in the bubble in any way -- in fact, who saw what was happening and criticized it.

That's why markets should be regulated -- it's not just a matter of "individual responsibility" -- it's like letting people drive drunk: they can hurt you too.

ROFLMAO !!!

This is what you get when you continually use currencies that are built on thin air & not reality.

Of course the "big operators" need to suffer the consequences but we all know that never happens because, as David Triche put it :

"...those bankers and banks took that money and bought, congressmen, senators, Bush and the candidates for president...."

Bought and paid for irrespective of the individual`s party logo. Probably some China & soverign fund money in those bought & paid for people as well.

So who has the guts to call the game ? No one, not even those wringing their hands about all this.

When I see masses of people with pitchforks and torches on the march I`ll know all the nay sayers are serious. Until then STFU & take your medicine idiots cause you have NO GUTS. You rolled over for this.

"Against stupidity, the very gods themselves must contend in vain." - Friedrich von Shille

I would include WSJ socialism--the philosophy of subsidizing non-competitive businesses with cheap illegal alien labor--cheap for businesses that is, but the most expensive method of subsidizing business as the taxpayer has to fork over the money for the care and education of the illegals and their jackpot babies.

I would include WSJ socialism--the philosophy of subsidizing non-competitive businesses with cheap illegal alien labor--cheap for businesses that is, but the most expensive method of subsidizing business as the taxpayer has to fork over the money for the care and education of the illegals and their jackpot babies.

re: "privatize the profits, socialize the risk..."

That's a really great slogan! I'd expect to see something like that in a spoof on The Daily Show or Colbert Report.

But I would expound on it this way:

The BushCorp. total clusterfuk guarantee:
You frontload the profits, but defer the kickbacks 'til 2009, and we'll socialize your risk and preemptively pardon any perpetrators. That's how BushCorp puts the privateer back into privatization!

Krugman Monday:

...if history is any guide, the coming taxpayer-financed bailout will end up costing a lot of money.

The U.S. savings and loan crisis of the 1980s ended up costing taxpayers 3.2 percent of G.D.P., the equivalent of $450 billion today. Some estimates put the fiscal cost of Japan’s post-bubble cleanup at more than 20 percent of G.D.P. — the equivalent of $3 trillion for the United States.

If these numbers shock you, they should. But the big bailout is coming. The only question is how well it will be managed.

As I said, the important thing is to bail out the system, not the people who got us into this mess. That means cleaning out the shareholders in failed institutions, making bondholders take a haircut, and canceling the stock options of executives who got rich playing heads I win, tails you lose.

According to late reports on Sunday, JPMorgan Chase will buy Bear for a pittance. That’s an O.K. resolution for this case — but not a model for the much bigger bailout to come. Looking ahead, we probably need something similar to the Resolution Trust Corporation, which took over bankrupt savings and loan institutions and sold off their assets to reimburse taxpayers. And we need it quickly: things are falling apart as you read this.

Krugman's analysis has much merit. And more merit for not falling into the typical populist anti-finance ranting.

re: "...the big bailout is coming. The only question is how well it will be managed."

Well, hmmm... remind me again how well has the Bush administration managed previous "big" projects?

Capturing bin Laden?

Iraq (overall stability)?
Iraq (terrorist haven)?
Iraq (oil production)?

Katrina?

On the other hand, they have been doing a nearly unprecedentedly* good job of running up huge debts going from $5.7 Trillion to $9.4 Trillion in just seven years, and doing end-runs around those pesky restrictions imposed by the Bill of Rights. So that's something, I guess...

*True, the federal debt did increase more in percentage terms during Reagan first 7 years, but he had a much lower starting point of under $1 Trillion. It's tough to keep big numbers like that expanding geometrically forever.

"'Why aren't the Democrats demanding the re-regulation of Wall Street and the reining in of compensation in the finance industry as quid pro quo for these bailouts?'

Because, those bankers and banks took that money and bought, congressmen, senators, Bush and the candidates for president. Isn't it obvious?"
Posted by: David Triche

That's exactly what I was going to say, But David Triche beat me to it. Never mind.

From Wikipedia, the free encyclopedia
The Keating Five (or Keating Five Scandal) refers to a Congressional scandal related to the collapse of MOST of the Savings and Loan institutions in the United States in the late 1980s.
In 1989, the Lincoln Savings and Loan Association of Irvine, Calif., collapsed. Lincoln's chairman, Charles H. Keating Jr., was faulted for the thrift's failure....... It came out that these senators had been beneficiaries of $1.3 million in campaign contributions from Keating. a series of investigations by the California government, the United States Department of Justice, and the Senate Ethics Committee. The ethics committee's investigation focused on five senators: Alan Cranston (D-CA); Dennis DeConcini (D-AZ); John Glenn (D-OH); John McCain (R-AZ); and Donald W. Riegle, Jr. (D-MI), who became known as the Keating Five.After months of testimony revealed that all five senators acted improperly to differing degrees,The committee recommended censure for Cranston and criticized the other four for "questionable conduct.".....

"Why aren't the Democrats demanding the re-regulation of Wall Street and the reining in of compensation in the finance industry as quid pro quo for these bailouts?"

Because the Democrats now rely heavily on Wall St. campaign contributions.

Never mind the liberal bloggers, how about the f'ing DEMOCRATIC PRESIDENTIAL CANDIDATES? Could they a few minutes out from playing stupid "gotcha" games to address the fact that the economy is melting down and it looks like Joe Sixpack is gonna get stuck with the bill? Hello? Anybody home?

Oh, sorry, bob h already answered the question. (Too bad Obama WASN'T more influenced by his preacher's radical politics... then maybe there'd be a candidate in the race who wasn't a member in good standing of the Plutocratic Party.)

>"But the big bailout is coming"

Houston, we have a problem. This time around, there's nothing left to bail with. The wealth of the nation has already been looted... or poured down the Iraq rat-hole.

"The pump don't work 'cause the vandals took the handle" (Borrowed from Bob Dylan)

Because the Democrats now rely heavily on Wall St. campaign contributions.

Not to mention most of them are also heavily invested in the market. They will be the first ones asking for a bailout. Our entire political class is on the hook to financial interests one way or another.

Making money by actually producing goods and services is so passé in America.

The way we finance houses needs reform. I think that's the clearest lesson. The agent who writes the loan has incentives to get it approved, but doesn't participate in the risk of it going sour.

So they shave requirements, and pass the bad loan on to someone else, collecting their fee. Before we get all high and mighty about cheating, remember Millikan's experiment, and the power of situations and incentives.

Banks can even pass the loan on, to hedge funds, or buyers of securitized mortgages.

Lending needs to be reformed. The leaders of reform ought to be lenders.

However, every single person who posts on this board is going to have a hard time if we don't bail it out. I would very much like to see taxes raised, to cover the costs of the bailout.

Per JS, Paul Krugman says: "We probably need something similar to the Resolution Trust Corporation, which took over bankrupt savings and loan institutions and sold off their assets to reimburse taxpayers. And we need it quickly."

To which I say: Rotsa ruck.

Can y'all hear me now?

'For over thirty years, as the U.S. deregulated its banking and financial systems, hedge funds and other “players� that wanted to speculate or arbitrage were able to raise tens of billions of dollars in days, while companies and entrepreneurs working in new technologies, such as bio-engineered fuels, struggled to find a few million. Speculation and arbitrage have become the focus of the U.S. financial system rather than supplying credit to the real economy. As a result, the future has been starved of investment.' The Crash is Past. Comes now Inflation 05 March 2008 - Tony Wikrent http://www.bitsofnews.com/content/view/7511/

However, every single person who posts on this board is going to have a hard time if we don't bail it out.

Thanks for your concern, but I'll take the hard time. I'd rather start over and bootstrap myself back up than bail out a bunch of millionaires who gambled on Wall Street instead of at the track like the hoi polloi.

Having said that, however, it has been reported that as much as one-third of the stock in Bear Stearns was held by Bear Stearns employees. So they may have taken substantial losses, depending on how well they diversified their wealth holdings. (Should we cry for them? The average Bear Stearns employee reportedly earned $242,000 last year.)

That's an average, not a median, an average boosted by the tens of millions of dollars the top people got. The average Bear Stearns secretary, messenger, assistant, etc. didn't make near that.

And even if you don't want to cry for the employees, you may want to spare some sympathy for their families.

> One of the questions I've been toying with is who might be inclined to game the system during this moment of crisis.
>
>

Didn't a lot of people raise eyebrows when BofA bought Countrywide a few months ago, saying "wow they're brave"...and then a month or two later BofA comes out pushing for a Federal bailout of the type of bad debt that was dragging Countrywide down? I barely understand this stuff, but it seemed like that's what happened.

I think the fact that only a very few people begin to understand this is the reason the Dems don't push for regulation. They figure it's too arcane to score points with the voters; they're better off playing ball and raking in corporate banking contributions themselves.

Thanks for your concern, but I'll take the hard time. I'd rather start over and bootstrap myself back up than bail out a bunch of millionaires who gambled on Wall Street instead of at the track like the hoi polloi.

The misconception you're making is that you're only bailing out the millionaires. But they're OK, they don't need your help. But each financial institution that collapses will fall right on the heads of its regular employees (and their families) and shareholders, the vast majority of whom are not wealthy. Don't forget, for example, that state pension funds are heavily invested in these institutions -- if they go under, then so does the value of the pension funds' portfolios, which in the end means less money for retirees. You may want to start over, but I'm not sure a bunch of retirees in their 60s, 70s and 80s relish the same chance.

Socialism for the Rich;
Free Enterprise for the (newly) poor;
God Bless America,
Same as it Ever Was.

What was it that Ralph Nader's father once said to him: "Can Capitalism be saved? Yes son, because a socialist will come along and save it."

And you don't think we live in a socialist economy all you so-called conservatives? What planet do live on? What gives the Federal Reserve the Constitutional authority to arrange for the takeover of major finanical institution by another major financial instution without risk of loss? Hmmm?

Let Bear-Stears fail. They deserve it. They made bad loans and investments that lost money. It's one thing to say, okay, the bank failed but we will insure your deposits so you don't lose your money. It's another to say, the bank failed and we'll make sure its assessts gets bought out by another bank and guarantee the buying bank against any losses with U.S. taxpayer money.

The average Joe can lose his house, get his cars repoed, lose his business, see his credit rating slashed but God forbid rich people don't have the same things happen to them, especially with the all-powerful Federal government coming to the rescure to bail them out of their own bad mistakes. It's sickening.

Ron Paul was out there for a year and half warning you all about what was happening, how the Fed had become the tool of the rich to put the taxpayer in hock for their mistakes. He warned you all that the Fed was killing the dollar with its rate cuts which is why oil prices are rising and inflation is skyrocketing.

But you all just ridiculed him. Well now the chickens are coming home to roost aren't they? And no one in the "cosmo" left has said a damn word about it. Maybe if you would just drop your ideological sunglasses and look around you'll see what's going and that's a finanical meltdown of Depression-era proportions. The Fed, in trying to stave off a recession, is going to cause a Depression with high inflation to boot.

But that's okay, others and myself will bare our "Don't Blame Me, I voted for Ron Paul" bumperstickers with pride. That's all we'll have left I suppose.

Here is an example of somewhere I feel Progressives are 100% correct. Any industry that places two parties in an asymmetrical power/knowledge relationship, these industries should be regulated. Not because govt knows best, but because people can be evil (and evil people are sometimes more effective than decent ones.)

Ron Paul's policies would be as effective in dealing with he crisis as Herbert Hoover's were.

A very good point from Matthew Yglesias:

As I said before, I don't necessarily have a problem with the government intervening to help stabilize the financial markets if that's what's necessary for the economy. There's no sense letting a sense of spite directed at the wizards of high finance get in the way of doing what needs to be done. But surely Democrats could seize this opportunity to make the case for the rest of the social contract. After all, it was just a couple of months ago that the GOP was blocking efforts to temporarily increase food stamp benefits and extend unemployment insurance and doing so in the name of free markets and moral hazards.

It's preposterous. This is the time to be making the case for progressive taxation and for a safety net that works for the broad mass of people, not just a selective one for people who reap the windfall during boom times and then walk away from losses when things go bust.

http://matthewyglesias.theatlantic.com/

Ron Paul was the only candidate who directly addressed the problems that we face economically:

1).By printing fiat money and allowing excess credit in the economy, the Federal Reserve is destroying both the purchase power of the dollar, but also its prestige as well in competition with the Euro. In so doing it threatens hyperinflation and massive interetes rate hikes to prevent its utter collapse.

2). The U.S. cannot afford its current policy of interventionism and pay for its entitlement programs and subsidies at the same time, not without massive deficits, savage spending cuts or huge tax increases. One has to be sacrificed, especially with much of the economny in hock to foreign investors like China.

There's underlying hubris in all of this. "Too big to fail." "We're an empire now." "They won't let uss collapse." Ron Paul was the only humble servant running for President, because he understood that for America to stave off finanical collpase it had to change its ways.

"However, every single person who posts on this board is going to have a hard time if we don't bail it out."

Or if we do. It's not like you undo the damage by having the taxpayer pick up the tab. And a bailout guarantees we'll do it all over again in a couple of decades.

Heads the investment bankers win, tails the taxpayer loses. A fun game if you're an investment banker.

Sean Scallon (or other Paul supporters)

It's fine to analyze the crisis in terms of policies and structures put in place years ago. You might even be right. But answer me this: what would the divine Dr. Paul do today, besides toss the Fed away? How do I keep my house, St. Ron? What would the platform be beyond I Told You So and Our Day Of Vengeance Will Come?

Thanks you, and I'll take my answer off the air.

Stefan, call me heartless but I, as a middle class taxpayer, am goddamn sick and tired of my tax dollars going to support a war in Iraq organized for and run by privateers and I'm sick and tired of my tax dollars going to bail out captains of industry that contributed nothing but stretching paper and leveraging each other into oblivion. The fact that a lot of joe six packs were too greedy and/or stupid to get out when the signs were clearly there should not be my problem as a taxpayer.

Where is the proposal to liquidate all assets and pay the taxpayers back? Where is the proposal to roll back all those bonus checks that just went out a few months ago to pay the taxpayers back? Where is the proposal to seize the assets of the executives to lead their companies off the edge of the abyss to pay the taxpayers back? Where are the proposals to reinstate Glass-Stegall? Where is the proposal to abolish the Fed and let our government print it's own currency?

Either we regulate the living f*ck out of financial markets or we let them take their losses when they get too greedy. You don't get it both ways.

blank,
You're right in principle. But if you let every over-extended joe sixpack that was "too stupid to get out" go under, we'll probably be taking you clever fellows along with us. Which, at this point, is probably what's going to happen anyway.

Enjoy the swim.

This guys right, Kev: Wall Street's already taken the measure of Bernanke. They squeezed, he squealed. I wouldn't start making loans again until the gov't guaranteed every cent I laid out.

BTW my vote for Winner of the Thread is MG's first comment.

Kevin's correspondent wrote: "Why aren't the Democrats demanding the re-regulation of Wall Street and the reining in of compensation in the finance industry as quid pro quo for these bailouts?"

Because the Democrats, like the Republicans, are bought-and-paid-for servants of America's Ultra-Rich Ruling Class, Inc. The Democrats, like the Republicans, are enablers of kleptocratic oligarchy and post-capitalist corporate feudalism.

The difference between the Democrats and the Republicans is that the Democrats espouse a "kinder and gentler" corporate dictatorship: they believe that the rest of us should get a few crumbs from the table of the ultra-rich, whereas the Republicans believe the rest of us should get a kick in the teeth.

Just like the S&L bailouts cost the taxpayers big time, this bailout will do the same. It's already more extensive than advertised

...The first brokerage bailout came without all the media fanfare because it arrived not on the wings of a public announcement but in five pages of indecipherable Fed jargon addressed to the General Counsel of Citigroup.
Here is the effective message sent by the Federal Reserve to Citigroup in its letter of August 20, 2007: now that we have allowed you to become both too big to fail and too big to bail by repealing the depression era investor-protection law known as the Glass-Steagall Act at your mere beckoning, we have to bend more rules to keep you afloat. So, for example, the rule that says the Federal Reserve is not allowed to lend to brokerages, just banks, from its discount window can be tweaked for you by lending up to $25 billion to you and then we'll let you lend it to your brokerage arm. The Federal Reserve Act rule that says a bank can't loan more than 10% of its capital stock and surplus to its brokerage affiliate, we'll let you go as high as about 30% and say it's in the public interest.
By giving Citigroup an exemption from Rule 23A of the Federal Reserve Act, by allowing it to funnel up to $25 Billion from the Fed's discount window to its brokerage clients who were getting hit with margin calls, the Federal Reserve and Chairman Ben Bernanke telegraphed an incredibly dangerous message to global markets: we're just as unaccountable as Wall Street. The Federal Reserve as enabler under Alan Greenspan created today's problem and today's Crony Fed under Ben Bernanke is killing off what's left of U.S. financial credibility....

What do you think the odds are of re-regulating this mess? Greenspan, the Randian nutjob, is still:
...at it: accepting no blame, he continues to insist that market flexibility and open competition are the most reliable safeguards against cumulative economic failure....

David Cay Johnston's book, Free Lunch will give you more examples than you care to stomach about how the Federal Reserve and the US government is dedicated to comforting the comfortable and enriching the well-connected.

Ron Paul was out there for a year and half warning you all about what was happening....Sean Scallon at 10:36 AM

I have an idea! Let's let brokerages and banks self-regulate!!

The fact that a lot of joe six packs were too greedy and/or stupid to get out when the signs were clearly there should not be my problem as a taxpayer.

Er, it will be when they default on their mortages, go bankrupt, abandon their homes, their children have to drop out of college, they go on public assistance, etc. and you eventually pick up the cost of that. Everything that happens in this inter-connected society of ours is, sooner or later, your problem as a taxpayer. You can pay a little now or you can pay a lot later. Let's not let a desire for retribution trump our longer-term self-interest.

(That said, I'm quite concerned about the moral hazard of stepping in to save Bear Stearns. But I'd rather a few guilty individuals go free if the cost of that is not punishing the mass of ordinary investors who did nothing wrong).

The fact that a lot of joe six packs were too greedy and/or stupid to get out when the signs were clearly there should not be my problem as a taxpayer.

And as I've mentioned before, many of these "Joe Six Packs" invested in these institutions aren't invested as invididuals, but through their state pension funds, union retirement funds, university endowments, mutual funds, etc. They weren't greedy or stupid -- hell, most of them had no idea, nor should they be expected to have, of what their pension fund was invested in. How exactly could they "get out"?

Say CalPERS (the California State Public Employees Retirement System) takes a big hit on Bear Stearns. This impacts the pocketbook of every single public employee in California -- do you think that won't have some immediate and negative ripple effects on the broader economy that will effect you as a taxpayer?

'The United States is so broke, its people at every level from the Federal Reserve on down don't know whether to shit or go blind.' - James Howard Kunstler/'Fullblown Panic'/21Jan08

It seems they're chosen C) both of the above.

Franklin Delano Roosevelt: “We have always known that heedless self-interest was bad morals; we know now that it is bad economics.�

There is already a substantial amount of proposed regulatory changes in the works to prevent another future episode. But, we need to start being proactive again with regards to asset bubbles and abandon the Greenspan philosophy of letting them build and pop and then just doing good janitor work afterwards. If you factor out the hyped housing market and extracted equity consumption, the economy has been relatively flat since 2000. Allowing this circus to unfold with all the attendant warning signs has camouflaged our underlying economic weakness and delayed any efforts to address that.

On a side note, they've got to be weighing the damage the falling dollar is doing to the economy versus the need to cut rates to keep stocks up. At some point it seems they are going to have to stop cutting interest rates and allow stocks to take a big drop and rely more on big interventions like the Bear Stearns deal instead in hopes that the dollar's slide can be checked and oil prices can come down. What a mess.

i miss the Norman Rogers bot. This would be the perfect place for a little of that "I bootstrapped my way to a fortune using daddy's money until the overbearing Feds came in and clapped me in irons for insider trading."

Plenty of blog commenters understand the Fed's bailouts are creating a scenario for hyperinflation, a massive transfer of wealth from the middle class to the wealthy and represent a capitalist command economy. And there is not a damn thing anyone can do about the loss of living standards most Americans will be experiencing over the next couple of years.

Bloggers, liberal or otherwise, like other forms of current event media and the general public, do not want to express negativity lest that negativity make the negatives too apparent. At least that is what I was told when predicting 20% unemployment, $6/gallon gas and $10 six packs of beer while discussing the economy on Friday evening. I think it was the beer price prediction that stimulated so much denial.

Libertarianism? Where the libertarianism in all this? If Greenspan was still a true Randian he would have never been Fed chairman, because a true Randian does not believe in an all-controlling, all-powerful central bank and he does. And not only does he believe in a central bank, he believes it should pump-prime the economy with easy money given away like pork chops at a meat raffle. How Keneysian. He might as well be the Fed chairman for Argentina.

Housing was no different than the dot-com farce. Greenspan is not a flinty, traditional Republican starch collar banker. His philsophy is anybody who wants money should get it until the economy overheats and then I pull the rug out from everybody and we start all over again with another economic boom of my creation. Greenspan's God is not Ayn Rand, it's Arthur Laffer. High economic growth at all costs, without exception and regardless of debts run up because he knew the U.S. economy, leveraged with its subsidies, its entitlement programs and its overseas committments, could not sustain itself without such high growth to make sure there was sustainable cash flow coming into D.C.

What would Ron Paul do? I pointed out what he would do to put the economy on a firm footing. Allow for gold and silver speicie to compete with paper money, begin the process of dismantling the Fed and bring the troops home, from everywhere, not just Iraq. If individual states want to impose regulations on Wall State trading like New York, they can do so. If individual states want to impose moratoriums on foreclosures, like Minnesota, they can do so. Ron Paul wouldn't stop them.

But he would stop taxpayer funded bailouts of rich people. That you could count on. I damned tired of it too.

Got my Irish up today...

I know it's been said by others but, once again, we see that it's capitalism for the average American, and socialism for the wealthy. Of course we'll be told that this bailout was important, as the benefits will 'trickle down' to the average person. Can anyone explain how?

email to Kevin Drum: One of the things that shocks me is that the liberal blogosphere has been deadly silent about the massive bailout of bankers that is taking place with taxpayer money

Try Dean Baker: The NYT Hides the Bailout of Bear Stearns From Readers. See also numerous other posts on his blog where he talks about this.

Yes, the Fed has to keep the financial system afloat, or we're all screwed. But that's no reason to let irresponsible speculators keep even a penny.

AFAIK JP Morgan has been pretty good about avoiding this pitfall (the exact opposite of Bear Stearns). Buying up irresponsible competitors for pennies on the dollar is a legitimate business practice. In this case though the Fed is making certain "guarantees", which is just socialism for the rich.

IF the government bailed out the homeowners, wouldn't that mean that the bad loans would be made good? And wouldn't that mean that the people holding, in their mysterious packages, the bad loans would not have a problem? If we're going to bail out somebody, let's bail out the little guys, which would, it seems, help the big guys. As to moral hazards, let's figure out some consequences. Like, when you sell your house, X years from now, for more than you paid for it, the increase goes to the government. Non-economist just wondering if there is a fair and decent way to avoid an economic collapse that hurts everyone. And when is Obama gonna speak up on this? Go after those working class votes, dude!

"Houston, we have a problem. This time around, there's nothing left to bail with. The wealth of the nation has already been looted... ..."

Posted by: Buford on March 17, 2008
------------

Think of it this way: what value is put on the U.S. dollar? What backs it? What backs U.S. Treasury bills? Stocks? All U.S. assets?

It's the work produced by Americans.

Now, take a large portion of those jobs overseas and ask again, what is the value of those assets?

Why should the market be soaring? Because they're printing more dollars. But, how much is each of those dollars worth and how much tomorrow?

We're punting American asset values to oil countries and to foreign labor and still expecting stocks & bonds and the dollar to be worth something?