This Bailout Is Terrible!

My recent article "This Bailout Is Great!" led to polarized reactions. It's among the most recommended article ever on, and it probably has the most comments. Typically, comments indicate disagreement. In this case, loathing is probably more accurate.

In light of the reaction, it seemed appropriate to address some of those comments.

No Marxists allowed
Probably the biggest misperception about the article was that it was a socialist manifesto by a berserk Obama fan. The problem with this rebuttal is that it doesn't actually address the thrust of the article.

Although I said that capitalism has the occasional blind spot, that's far from a condemnation of free markets. Few would argue that when Freeport-McMoRan (NYSE: FCX  ) builds a gold mine, it should be allowed to let cyanide leach into the drinking water of nearby towns. There's nothing inherent in capitalism that prevents that sort of behavior. It's a blind spot that we correct through regulation. We have laws because complete free markets neither protect people's rights nor result in a stable society. So, it's unclear why saying that capitalism has blind spots should be controversial.

Possibly the most common concerns were variants of this comment:

It is absolutely impossible to get a good long-term result from government consumption.

Put aside the fact that the government has been consuming resources for centuries, and that America has been spectacularly successful. The main problem with this argument is that it's entirely ideological. It fails to address the issue at hand and provides no evidence. Though there may be great reasons for believing this point of view, the argument is only convincing to someone who already shares the same beliefs.

Other views were understandable, but missed the point. For instance, one member expressed the frustration many of us feel:

Where is the justice in the pure GREED that was exhibited by the banks and just WHY should future generations be paying for these greedy so called executives??

This view is absolutely right -- there is no justice here. Taxpayers should not be in this position. But the bailout isn't about justice. It's about survival. The central thesis of the article was that without government help, there was a good chance that our banking system would collapse, and that would result in unbelievable pain for all of us.

Prove me wrong
Refuting the article requires evidence that the banking system would not have collapsed without the bailout, or that America would be fine with the collapse of its financial system.

Before going down the latter path, consider that on Sept. 18 we had an electronic bank run to the tune of $550 billion in just a couple of hours. According to Congressman Paul Kanjorski, Treasury estimates that had they not temporarily shut down the system and raised deposit guarantees, $5.5 trillion would likely have been withdrawn from the U.S. money market system by 2 o'clock, effectively taking down our financial system.

Consider also that according to CreditSight's "severe" test scenario, Citigroup (NYSE: C  ) and Bank of America (NYSE: BAC  ) combined could face another $200 billion in mortgage-related losses over the next two years. NYU Professor Nouriel Roubini estimates U.S. banking losses could peak at $3.6 trillion, which "means the U.S. banking system is effectively insolvent."

To see what happens when a banking system collapses, look no further than Iceland. Iceland's no banana republic -- in 2007, the United Nations called it the most developed country in the world. But in October, the country's banking system collapsed.

As a result, Iceland's currency has lost about half its value. Inflation is now 18.6% and rising. The central bank's interest rate is 18%. Unemployment has quadrupled. The stock market is down 90% since the end of September. It's ugly. And all this has happened before most of the aftershocks from second-order effects, like the results of skyrocketing interest rates.

The terrible thing
That said, there is one terrible thing about this bailout, which was barely addressed in the feedback on the original article. It's not the executive bonuses, corporate jets, spa getaways, or even moral hazard. Though it would be very bad if the banks started taking the bailouts for granted, I believe executive pay limits and the risk of humiliation should help curb most excesses.

Rather, the worst thing about the bailout is that this sort of government intervention distorts the market. If banks can earn interest on money deposited at the Fed, will banks be motivated to lend money to other banks? When the government provides short-term loans to businesses, it hurts private lenders who are forced to compete with the government.

In fact, ACE (NYSE: ACE  ) , Loews (NYSE: L  ) , and Chubb (NYSE: CB  ) have already suggested that AIG (NYSE: AIG  ) is using its federal bailout money to undercut competitors in commercial markets to maintain its market share. They have a point. While preventing AIG's bankruptcy to avoid cascading problems was reasonable, AIG should have been put into run-off, stopping the insurer from writing new business and eventually winding it down. At minimum, that should be the price of failure.

The Foolish bottom line
The distortion of the market is the worst thing about the bailout. Nevertheless, the bailout still looks successful so far. The TED spread is under 1, implying that confidence is returning to the banking system. More importantly, the financial system is still standing. We may have seen the worst of the banking crisis, and if that's true, in two years, today's stock prices could look extremely cheap.

Our Inside Value team has found stocks trading at ridiculous discounts to their fair value. You can read about all our picks with a free trial to Inside Value.

Fool contributor Richard Gibbons figures that if he shills enough for Obama, he can pick up some of that stimulus package. The Fool's disclosure policy knows more about economics than Richard.

Read/Post Comments (284) | Recommend This Article (576)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 18, 2009, at 3:21 PM, mlaursen wrote:

    I'm not sure distortion of the market is the worst thing about the bailout. What about the huge increase in national debt?

  • Report this Comment On February 18, 2009, at 3:39 PM, whereaminow wrote:


    I was very critical of your first article, and I'm glad you've clarified some of your thoughts. I realize that you are limited by word count.

    You wrote: "The distortion of the market is the worst thing about the bailout."

    Richard, the distortion occured BEFORE the bailout. The distortion is inherent in the Federal Reserve system. By artificially lowering interest rates, the Fed distorts business ventures. Expansion and building that would not be feasible with a market-determined interest rate, are now profitable. Riskier ventures became profitable, then more risky. Finally, all sense of risk goes out the window. The housing industry's huge run up in the last two decades are the result of this distortion.

    Thus, you are asking the Federal Reserve to fix a problem they created (market distortion that lead to a pyramid of risk and debt) with the same method (market distortion to prop up a pyramid of risk and debt).

    So this doesn't seem like a solution to me, more like the continuation of a horrible policy. We are just delaying the inevitable.

    Peaceful solution:

    1. Abolish the Federal Reserve

    2. Repudiate the National Debt

    3. Abolish the Income Tax

    4. Demand 100% currency reserves for banks

    5. Allow free market money (e.g. Liberty Dollars) to compete with fiat notes.

    On the flip side, if we continue to bailout every problem caused by government, we will end up with a lot of government and nothing else.

    David in Qatar

  • Report this Comment On February 18, 2009, at 5:29 PM, lwnoronha wrote:

    Oh! Now you've worried about the National Debt! Where were you for the last 8 years in particular and the last 30 years in general? If nothing else, we will have something tangible to show for all the spending.

  • Report this Comment On February 18, 2009, at 5:35 PM, synersoft wrote:

    The worst part of the bailout is that the gov't is printing trillions to buy votes and inefficient short-term relief. Are we really paying over $200K per job created? Why not just offer a -50% payroll tax? Oh, because then Congress wouldn't be in charge of handing out trillions? We're screwed!

  • Report this Comment On February 18, 2009, at 5:38 PM, esquire25 wrote:

    The false debate between "captalism" and "socialism" should stop. Neither economic system has ever existed as a national economy in either form. It's always been a matter of degree.

    It is not a socialistic view that markets correct within limits and outside those limits, there's chaos. When consumers don't spend and businesses don't spend, the government has to.

    The jobless and soon to be jobless, and the homeless and the soon to be homeless are our fellow citizens. They don't have the time to see if the theory works.

  • Report this Comment On February 18, 2009, at 5:41 PM, breider wrote:

    Are you sure Congressman Kanjorski has his numbers right? This seemed off the chart to me, and in trying to check it out, I came across what seems like a pretty factual rebuttal at:

    Particularly in times like these, fact-checking is critical.

  • Report this Comment On February 18, 2009, at 5:43 PM, akccpa wrote:

    I can't believe Tom and David actually let this guy write this trash, and publish it on the Fool email list. Especially when MOST informed business writers are stating just the opposite, particularly about the "good" and "bad" parts of this bailout mayhem.

    Good luck to you Fool owner/managers in keeping the majority of your subscribers plugged into this trash analysis by Mr. Richard Gibbons and remaining supportive of your efforts.

    This sort of reminds me of the owners'/managers' justification for and defense of investing so much of the MDP early on in the SPY index security (remember the stated goal of the MDP - definitely not buying the whole market compared to individual stock analysis and due diligence). Wow, did we take it in the "shorts" on that investment!

    Fool on! But, let's not be real fools!

    Al C.

    Windermere, FL

  • Report this Comment On February 18, 2009, at 5:46 PM, melbyt wrote:

    David in Qatar has an excellent point. The government has been distorting the market for years and is only worsening that problem with the bailout and even more with this stimulus bill.

  • Report this Comment On February 18, 2009, at 5:48 PM, MDKirby wrote:

    Iwnoronha, I'm not sure where mlaursen was for the past 8 years (or 30), but he very well could have been worried about the national debt during that time.

    Just because gov'ts have run up the national debt before does not make it a good idea...the rationale that "Bush ran up the debt with tax cuts and wars, so who cares if Obama runs up the debt with reckless spending." is very flawed.

    Mr. Bush made some terrible, terrible mistakes, but that doesn't justify Obama making catastrophic decisions now.

  • Report this Comment On February 18, 2009, at 5:54 PM, jrj90620 wrote:

    David in Qatar seems to have this figured out.He left out a few things I would add.Take away govts(fed,state and local) credit card.They have proven they aren't responsible borrowers.Only allow short term seasonal borrowing that would require govt debt to fall to zero at some date each year.I propose a flat 10% tax on gross income with no deductions and no other taxes.All govt would only spend revenue received.I can dream,can't I.

  • Report this Comment On February 18, 2009, at 5:58 PM, Dart65GTConv wrote:

    Hooray, Somebody finally said it here. Not exactly my version but the idea is there. Here mine. Congress cares nothing about the market other that it has power to push round the fed from time to time. To me the present majority have a particular distain for anything they cannot fully influence to their ideals. Creating market instability with policy that defies basic economic principles causes disruption and desperate practices buy the private sector. Thus causing incriminating actions buy cornered corporate managers. If thats not bad enough, they are then drug out in front of congress like conquered roman subjects not daring to point a finger back at the accuser. This is sick and twisted. This kind of power is seeked through poverty and creating need of government. Somebody relieve me this conclusion with a sound logical alternative viewpoint. ROME IS BURNING ITS NOT TIME FOR PEOTRY

  • Report this Comment On February 18, 2009, at 6:06 PM, MyPiggyBank888 wrote:

    Big business government is and thank you for spending my credit. In the long run America has good credit because of us, the little people! So let those who will get less from us, get less from us. Credit crunch means we buy less. Buy less with cash. If you have cash, God Bless You! Use it wisely. The government has used our credit so we should manage our cash. That's my sermon!

    Good luck fools!

  • Report this Comment On February 18, 2009, at 6:07 PM, whclark2001 wrote:

    Where is it said in the definition of capitalism that there cannot be rules to protect the public? No way!

    Is it then socialism to require the mine owner to prevent the leaching of cyanide into the drinking water? Hardly!

    Every issue has at least one zealot fighting for total control over the situation, total return for the positive outcomes, and zero responsibility for the negative outcomes.

    The only blind spots that exist are those found in our understanding of basic principles, our efforts to promote the common good, and our tolerance and defense of dissenting opinions.

  • Report this Comment On February 18, 2009, at 6:13 PM, turinm wrote:

    Some of these comments reminds me of an old boss I had at IBM who said "there are certain problems, the only solution of which is not to allow them to arise in the first place". While a brilliant philosophy, it didn't give me much guidance upon which to act in the coming 24 hours! OK - So now I understand what we shouldn't be doing. What do you guys suggest we SHOULD be doing to stem the flood of foreclosures and firings. We're talking about real people out there!

  • Report this Comment On February 18, 2009, at 6:26 PM, JPerryE wrote:

    "Sic utere tuo ut non laedas alienum," so use your own as not to injure the property of others

    "First: No man is to deprive another of his property,

    or disturb him in enjoying it.

    Secondly, every person is bound to take due care of his own property, so as the neglect thereof may not injure his neighbor.

    Thirdly, all persons must so use their right, that they do not ... damage their neighbor's property."

    Giles Jacob 1729 (A New Law Dictionary)

    There is a remedy for injury caused by one person to another. There is practically no remedy for the plundering of a citizen’s property through the power of government. Nearly all regulation is promulgated and nearly all laws are passed in the name of a “public good.” Yet most of those laws and regulations are nothing more than one interest group gaining the upper hand over another. The political class skews the markets and enjoys the perks of power in the process.

  • Report this Comment On February 18, 2009, at 6:28 PM, newcfam wrote:

    This "bailout" is a joke. It's simply a power grab from the far left led by President Pelosi, Vice President Reid and their house boy Obama. Let's just hope the American people snap out of their trance in time to stop these loons!!! The only thing stimulated with this bill will be the outrage of free thinking Americans and the pockets of politicians and their special interests. The economy will continue to spiral in a downward free fall.

  • Report this Comment On February 18, 2009, at 6:33 PM, MUUM wrote:

    Isn't anyone concerned about what all this borrowing and printing of new money will do to our inflation rate? I think Obama spoke the truth very succinctly yesterday when he said "this is the beginning of the end." 2nd rate socialistic country, here we come!

  • Report this Comment On February 18, 2009, at 6:36 PM, pmbarrett wrote:

    This is pure trash. That you would even use a discredited, embarrassing politician like Paul Kanjorski as a reference makes you work very suspect.

    I disagreed with your original piece and this one is no better. Your analysis "Nevertheless, the bailout still looks successful so far", does not address the measure of pain that will be visited upon future generations. Also, correct me if I'm wrong, but it looks like the street isn't too excited about this bailout either, or don't you consider 300 point drops to be that significant?

    What a waste of bandwidth!

  • Report this Comment On February 18, 2009, at 6:36 PM, AtlasAynRand wrote:

    Oh Pleassssssssse.....the pathetic bailout cure is far worse than what we will face as a result.

    There are two forks in the road with this bailout:

    Scenario One: China and other countries will

    buy our debt (aka Treasuries) and thus own us


    Scenario Two We will have to print money to cover the debt if other countries don't....and that will lead to significant inflation, perhaps hyper-inflation.

    Sometimes we just have to take our medicine and let the chips fall where they may.

    It certainly doesn't help to have a President going around and telling everyone in ear shot that we are doomed and the sky will fall on us all if we don't go along with the bail out.

    I am bracing for Obama's next pronouncement that the sky will fall and we will all face the end of life as we know it if we don't bailout the auto industry.

    Then I guess the Credit Card companies will be the next crisis of sky falling.

    Then you pick the industry, because the sky will fall and life will end if don't give every Tom, Dick and Harry (Corporations only need apply) a bailout.

    No end in sight, and at least I will be dead when all this debt comes due.

    Does anyone know at want point the US' Debt to Equity makes us worthless? Is the US Government the next Lehman Brothers?

  • Report this Comment On February 18, 2009, at 6:41 PM, plantoretire1day wrote:

    The title of this article is irresponsible. In particular because the title appears to be contrived in order to get attention and not because the writer believed it. Titles like that make people panic more, not less. Panic is not good for the stock market. But Motley should know that, I guess they just don't care. Why I thought this was a benevolent, straightforward, yet money making organization, I will never know. IT IS about making money, there own!

  • Report this Comment On February 18, 2009, at 6:43 PM, sapereaude1 wrote:

    Well, we could go the truly free market route. We could give every voting-age citizen a military rifle and a couple of hundred rounds of ammunition, and then make public the names, addresses, photos and estate values of the wealthiest 5% of Americans. After a few weeks of chaos, maybe we'd wash out the worst greed genes for a few generations.

    The government is trying to prevent that scenario by socializing critical segments of the economy. If Mammon-fellating right-wingers don't like it, let 'em emigrate.

    A 10th & 12th generation Yankee WASP.

  • Report this Comment On February 18, 2009, at 6:47 PM, TMFDiogenes wrote:

    "Prove me wrong

    Refuting the article requires evidence that the banking system would not have collapsed without the bailout, or that America would be fine with the collapse of its financial system."

    Anyone going to take him up on that?

    Someone? Please?

  • Report this Comment On February 18, 2009, at 6:53 PM, newcfam wrote:

    Those that run their businesses poorly (or in the ground) are supposed to be allowed to fail and disolve or be bought up by those those that have been prudent with their finances. That is the capitalist and American way. That has been the rule that we all were taught to abide by. What we are doing now is rewarding bad behavior. That goes against EVERYTHING America stands for!!!

  • Report this Comment On February 18, 2009, at 6:56 PM, 4558 wrote:


  • Report this Comment On February 18, 2009, at 6:57 PM, j1bird2k wrote:

    I waste my time reading these vitriol comments for entertainment purposes only. In fact there should be a warning/disclaimer at the top of the page just to insure nobody takes any of this editorial as fact. Fool me once, shame on you, Fool me twice, blah blah blah

  • Report this Comment On February 18, 2009, at 6:57 PM, JohnTransue wrote:

    A note on the National Debt. During the 8 years of Clinton with both Republican/Democratic congresses, the debt increased by around $1.6 trillion. In the first 6 years of Bush and a Republican controlled congress, it increased another $2.8 trillion. In the last 2 years of Bush with a Democratic congress, it increased another $1.5 trillion, or almost as much as the entire 90's. The debt on 9/30/08 stood a little over $10 trillion ( If we assume 303 million people in the US, that comes to a tab of around $33,000 for every man, woman, & child. That doesn't include the nonsense going on now. These people are insane, and every incumbent, regardless of party needs to be defeated, unless they can prove they are part of the solution and not the problem! The founding fathers were only worried about one branch of government, and it wasn't executive or judicial. They knew what could happen if congress grew too powerful.

  • Report this Comment On February 18, 2009, at 7:03 PM, chas84 wrote:

    Some very interesting and insightful views above. "David in Qatar" has spelled it out precisely though in his paragraph. The Federal Reserve is and has been THE problem since it's inception in 1913. Please take some time to understand how and why it was created. You will be surprised and mad as heck. You will see that most of the issues discussed above would not exist if it weren't for the Fed. Take the blinders off people!!

  • Report this Comment On February 18, 2009, at 7:08 PM, pmbarrett wrote:

    Hey TMFDiogenes, your post is quite disingenuous. I could simply ask you,

    " Prove to me that the banking system was going to collapse without government interference".

    And I don't mean quoting some politician or government hack. I want the same type of evidence that you want others to supply in refuting this piece.

    What do you have to backup the theory given?

  • Report this Comment On February 18, 2009, at 7:09 PM, afleetfeet wrote:

    Richard --

    I can't believe you posted another article on the same topic. You must enjoy being abused by all these Foolish people. Dave in Qatar, in particular, seems to be yearning for the good old days when a depression could be reliably forecasted every 10 years or so.

  • Report this Comment On February 18, 2009, at 7:10 PM, brwn8484 wrote:

    Boy... You trash all the antagonists because they dont have any proof the bailout wont work... I guess it is more justification that our education system is a failure and history teachers have failed to teach the important lessons. Any student of world history can name a half dozen empire collapses tied to greed, economic bailouts and statism.

    Ignoring the criticism just because you believe that statism is the answer is just a convenient excuse to support the insanity being shoveled down our throats. Perhaps you should consult a world history book if you cant figure out why our current course of action is foolish at best.

    We have failed to teach critical thinking in our schools for so long that we now have a group of leaders in Washington that simply have no clue.

    Robert Kiyosake wrote so eloquently "If you want to know why the towers of American capitalism are crumbling, I recommend reading "The Creature from Jekyll Island" by G. Edward Griffin. It's not an easy book to find, but once you start reading it's to put down. In fact, in many ways it's a murder mystery about the financial "murder" of the middle class.

    A very important lesson in the book is how political leaders use financial spin to deceive the public. The very, very rich use the system to legally steal from the rest of us by appealing to our sense of patriotism. When our leaders say, "We're bailing out Fannie Mae and Freddie Mac because we want to protect the American people," they really mean "We're saving our rich friends."

    All the bankers and politicians have to do is wave the red, white, and blue, play a few bars of "Yankee Doodle," and the masses get teary-eyed and pledge greater allegiance to legalized robbery. Yes, it's true that ignorance is bliss -- but ignorance is also expensive, and it cost us our freedom.

    Freedom at Peril

    A bailout can be different things. First, printing more money is a kind of bailout that leads to higher inflation. Rather than protecting people, it makes life for the poor and middle class more expensive. The other kind of bailout is protection for our rich and incompetent friends. If you or I fail at business, we fail. If we cheat and fail, we go to jail. But if you're rich and politically connected, your incompetence may be protected by a government bailout.

    As a former Marine and a Vietnam War veteran, it saddens me to see some of the freedoms I thought I went to war to protect being stolen from us by bankers and politicians. Unfortunately, few Americans know the difference between the words "nationalize" and "socialize." Socialize means we turn more of our personal powers over to Big Brother, not free enterprise. It means we as a people grow weaker and need a higher power -- the same power that got us into this mess -- to protect us.

    In short, when the towers of Fannie, Freddie, Merrill, Lehman, and AIG came crashing down, more came down than just money. What we're losing is the very freedom this country was founded on, and what most of the world yearns for."

    It is easy to accept the loss of freedom, even embrace it, when fear is at its greatest. But giving up our freedoms at the expense of Statism is follhardy at best. If you cant figure out why, then all the history lessons in the world will do little to enlighten flawed views of the dangerous path we are being forced to accept.

  • Report this Comment On February 18, 2009, at 7:17 PM, whereaminow wrote:

    When I was in high school and college, my teachers used to deride me as a "Deficit Hawk." That term was supposed to be an insult. After all, they reasoned, deficit spending was good for the economy. We owe it to ourselves, right?

    Now, if I borrow money from you, we both have a vested interest in keeping it honest and "on the level." You want to get paid back. I want to repay you so I can borrow again if the need arises. I might also care about my reputation (at least I hope so.)

    But if I arrange with you to borrow other people's money, we both know that it's a bit of a scam. They haven't seen the interest rate, compared it to other lenders, read the terms of repayment, etc... In fact, the less they know the better. We'll just wink and tell them "We owe it to ourselves."

    What should honest taxpayers do when they see government and their creditors engage in such wanton dishonesty and fraud? The deficit now stands at circa $12,000,000,000,000 and growing, plus another $50,000,000,000,000 in future entitlements owed. We sure do "owe it to ourselves" now!

    Why should we be economically enslaved to pay for the largesse of corrupt politicians and their sneaky creditors?

    Well I suppose this is a discussion for another blog but as the bailout continues to pile up debt it's worth discussing.

    And for those who view everything as Left/Right, I agree that GWB was a disgusting, horrible, immoral man who helped to bankrupt this nation and ran up the debt to ridiculous levels. I vote third party.

  • Report this Comment On February 18, 2009, at 7:33 PM, DoWeUnderstand wrote:

    Richard you are right on.

    I cannot believe the ignorant comments I read on this page about socialism and what is a free market. We must have a lot of unemployed brokers here. I am waiting for some bloke to say that they see the resurrection of Karl Max and Friedrich Engel’s Communist Manifesto. The greed of the non-regulated free market got us into this financial hole and it will only take government intervention to get us out of this non-regulated hole. The market economy will come back when it is regulated to be transparent and honest. Socialism has nothing to do with this entire picture. If you don’t believe me call Karl or Friedrich.

  • Report this Comment On February 18, 2009, at 7:37 PM, whereaminow wrote:

    Ok, and now this is how you prove Richard wrong.

    I've covered this in detail on many blogs, but I'll gladly write about again. It's called The Economic Calculation Problem of the Socialist Commonwealth, and although America is not outright Socialist the lesson applies here as well.

    In 1920 Ludwig Von Mises, chief economist for the Austrian government wrote an explosive essay which proved (and still not refuted) that Socialism does not work because it lacks a rational method for distribution. It lacks a Pricing Mechanism. Since that time many attempts have been made by Socialist economists (Keynesians) to work around this problem. Though they claim some success (see Lange-Lerner-Taylor and Schumpeter), [] and those arguments continue, there is certainly no doubt that Bureaucrats working outside of the open, competitive market can not rationally allocate capital.

    For a bureaucrat, the allocation of resources is not determined by profit. In fact, price is not even a concern. We've all heard stories about the Army paying $20,000 for a toilet seat. If an official makes a mistake, a poor decision, and wastes resources the only loser is the taxpayer. The contractor wins. The bureaucracy wins by being able to justify increasing budgets. The government wins.

    On top of that, since the bureaucrat is working outside of the market, he/she can not understand all of the factors or place a risk premium on these unknowns. In essence, they're winging it. They don't operate like market entrepreneurs. They don't calculate cost in order to maximize profit.

    So how do they operate? They have only one solution: to use the money to increase their own power. That's a no-lose proposition for them and the most logical one. This is why as soon as the bailout was over, the banks were turning the money right back over to the major parties campaign funds. In fact, banks lobbying for TARP money spent $114,000,000 to get their hands on it:

    That's how they operate.

    The marriage of government and banking turns them all into Bureaucrats. None of these people have to worry about losing. It's a win/win situation. They've used the bailout money to more firmly establish their own power, so when it fails - which it must, they won't be thrown in jail.

    The only loser is the taxpayer.

    Finally, the idea that a couple of Bureaucrats (Paulson, Bernanke, Geithner) know best how to properly allocate hundreds of billions of dollars is preposterous. How do they know? Based on what? What calculations did they make? What happens if they're wrong? Have we learned nothing about Central Planning?

    Now, have I proven Richard wrong? I'll leave that up to the Fool commentators. I just hope they avoid the Left/Right/Blue State/Red State nonsense and focus on my arguments. I vote third party. I don't give a rats backside about Republicans or Democrats. I just want honest, limited government if at all possible.

    And I want The Federal Reserve abolished.

    David in Qatar

  • Report this Comment On February 18, 2009, at 7:42 PM, whereaminow wrote:

    Besides, "Refuting the article requires evidence that the banking system would not have collapsed without the bailout, or that America would be fine with the collapse of its financial system."

    Do you see anything logically wrong with that question? I'll give you a hint:

    David in Qatar

  • Report this Comment On February 18, 2009, at 8:02 PM, EAbra48463 wrote:

    When President Bush warned us about terrorists and what they were capable of, and told us we had to do something to help prevent future catastrophic attacks, many on the left chided him for using "scare tactics" to implement his agenda. Now, President Obama is telling us the sky is falling every day, that the country will not survive unless we pass some ill-defined, bloated "stimulus" package, much of which does not even kick in for years. And this is not a "scare tactic"? Of course, the difference is that terrorists really did hijack airplanes and fly them into buildings on 9/11, and they really did threaten to destroy America altogether. Yet, there is plenty of evidence that what is going on right now is nothing more than a painful correction, which is ultimately good for the economy over the long-term, and Obama, Pelosi, Reid et al are using this correction as an excuse to implement a far left agenda.

  • Report this Comment On February 18, 2009, at 8:05 PM, mlaursen wrote:

    "wnoronha, I'm not sure where mlaursen was for the past 8 years (or 30), but he very well could have been worried about the national debt during that time."

    I can assure you I have been worried about the national debt all my adult life. If you think I'm a conservative because I stick up for free markets or worry about government spending, you'd be wrong. In fact, I don't see any evidence that conservatives do anything but pay lip service to free markets and small government.

  • Report this Comment On February 18, 2009, at 8:28 PM, xetn wrote:

    I would like to add that before everyone starts spouting ideas about how the government can take care of all of our problems, please read and understand something about real economics. My recommendation is Hazlitt's "Economics in One Lesson" available on-line for free. It is written in easy to understand "lessons" and even a Fool can understand it.

    Also, just take a look at Japan's attempts to "fix" their banking crisis. They now have now amassed more debt than any other economic power and still have not fixed their problems. And O'bama wants to use this as justification for doing the same thing; using government bailouts and money out of thin air to fix our problems.

    Next suggestion is start reading articles from and at least get a different view than the talking heads are espousing (including the

    Fool that wrote this and the previous article). What if they are all wrong? Who will bail us out then? What will happen to our currency?

  • Report this Comment On February 18, 2009, at 8:43 PM, whereaminow wrote:

    What does the Austrian School of Economics have to offer you:


    The Austrian School has consistently argued that a "traditionalist" approach to inflation yields the most accurate understanding of the causes (and the cure) for inflation. Austrian economists maintain that inflation is always and everywhere simply an increase in the money supply (i.e. units of currency or means of exchange), which in turn leads to a higher nominal price level for assets (such as housing) and other goods and services in demand, as the real value of each monetary unit is eroded, loses purchasing power and thus buys fewer goods and services.

    Given that all major economies currently have a central bank supporting the private banking system, almost all new money is supplied into the economy by way of bank-created credit (or debt). Austrian economists believe that this bank-created credit growth (which forms the bulk of the money supply) sets off and creates volatile business cycles (see Austrian Business Cycle Theory) and maintain that this "wave-like" or "boomerang" effect on economic activity is one of the most damaging effects of monetary inflation.

    According to the Austrian Business Cycle Theory, it is the central bank's policy of ineffectually attempting to control the complex multi-faceted ever-evolving market economy that creates volatile credit cycles or business cycles, and, as a necessary by-product, inflation (especially in asset markets). By the central bank artificially "stimulating" the economy with artificially low interest rates (thereby permitting excessive increases in the money supply), the government-sponsored central bank itself allows debasement of the means of exchange (inflation), often focused in asset or capital markets, resulting in "false signals" going out to the market place, in turn resulting in clusters of malinvestments, and the artificial lowering of the returns on savings, which eventually causes the malinvestments to be liquidated as they inevitably show their underlying unprofitability and unsustainability.[28]

    Austrian economists therefore regard the state-sponsored central bank as the main cause of inflation, because it is the institution charged with the creation of new currency units, referred to as bank credit. When newly created bank credit is injected into the fractional-reserve banking system, the credit expands, thus enhancing the inflationary effect.[29]

    This is the market distortion that occured before the bailout. Further market distortion will only make it worse in the long run.

  • Report this Comment On February 18, 2009, at 9:06 PM, hallockd2 wrote:

    I appreciate all the insight and commentary, and I agree with much of it. But I'm simplistic. If you deal only with the symptoms of the economy, you don't solve the disease that underlies the symptoms. The gov't put it's weight behind banks to make bad loans. The gov't then allowed those banks to market those bad loans to Fred and Fan. Then the gov't allowed the Mae twins to hide those bad loans in investment securities that have polluted the world's systems. Isn't the disease the viral MBS's and the market's reaction to the unknown risk in these vehicles, and the insurers reaction to the unknown risk in those heavily invested in anything that even might be tainted?

    Shouldn't the prescription fight the disease?

  • Report this Comment On February 18, 2009, at 9:11 PM, tradefortoys wrote:

    Geez, I read the article and agreed with everything you said!! Absolutely true that the bailout had to be done or else it would be a frenzy bank withdraw!!

    And I hope that it yields success soon, because I currently own PNC stock!! the worse scenario in my eyes is to nationalize the banks, now there is government intervention gone to extreme.

  • Report this Comment On February 18, 2009, at 9:18 PM, breaktrack wrote:

    Congressman Kanjorski is nothing but a Democrat lackey. Don't trust him as far as you can throw him!

  • Report this Comment On February 18, 2009, at 9:19 PM, intpj wrote:

    What is controversial is your understanding of what free markets and capitalism means. It is impossible to have capitalism and free markets without laws protecting and enforcing property rights and contractual obligations. There is no need for any kind of ad-hoc regulations (which work as much as ad-hoc bailouts, they make the matters much worse). The property laws protect everybody equally. That means (in your example) Freeport-McMoRan is not allowed to damage anybody else's property (by letting cyanide leach).

    The mess we are in is simply because we neither have free markets, nor do we uphold property (and contractual) laws, quite the contrary. Every action by the government is a screaming example of disregard for the property rights (stealing tax payers money) to bail out individuals and corporations (that are contractually on the hook for the loses) and illegally transfer those contractual obligations to taxpayers who had nothing to do with it.

    You have no clue why is America "successful", it is not because of the government consumption, it is in spite of it. Also, US enjoys a privileged status in the world due to the fact that the US$ is a world's official currency. Any other country that would try to do the same would end up like Zimbabwe. Eventually, US$ will end up like Z$, what do you think the fresh minted 10s of trillions of US$ will not have a long term effect on its value?

    You speak of banking system collapse and pain to us? The banking system will eventually collapse, because (that is why ad-hoc regulation is bad) it is allowed to do something no other business is allowed to do - exchange "goods" (US$) that do not exist (that is the fractional reserve at work) for other (real) goods and services. Simply put the money savers put into the banks has been loaned 10s of times (close to a 100 times over due to the circular nature of the fractional reserve) over and just a few percent of loses is enough to wipe out all the money of the savers.

    There is no other solution but a collapse, since those who benefit from the current scam will not give it up voluntarily. It may not come yet (in the US, but it will sure happen in many other small countries, like Iceland, Ireland, etc.). Things that cannot go forever do not, some learn from the history, some do not.

    It seems readers are much less foolish than the author, and some have a very good grasp at what is actually going on, what are the real causes and culprits.

  • Report this Comment On February 18, 2009, at 9:36 PM, ckeller98 wrote:

    From what I've read I get nothing out of this plan, other than to hope that it will work which will eventually help the economy thereby helping me. Not being super right or being poor and still being able to barely manage I will likely get to a point that barely will turn into unable to manage.

  • Report this Comment On February 18, 2009, at 9:43 PM, tinybit wrote:

    In many ways the economy is more dire than in the thirties because the world is so tied together. There is not a country on any continent that has been spared or has the ability or knowledge to 'jump start' the economies. Japan will bring down the Asian sectors, Venezuela and others will tear down the South American region, the East European and Russian economies will be a drag on the European continent. I have never been as pessimistic as I am now and I am almost seventy years old. I remember the 70's and 80's. I remember how the steel industry was devastated and restructured in the 60's. I believe that the government should stop all these bailouts and let the economy falter and try to gain strength on its own. Many of us are not fooled by all this tampering.

    The American public is not that gullible anymore. The average person is also tied more to the credit, financial and stock markets than it was in the depression years. We are also privy to more information than most were in those days and that makes us smarter and more aware of the future consequences and present circumstances. Only those who think they can scam the system will agree with these bills and programs. .Our whole capitalistic system is now at grave risk

    One more reason to be skeptical of all this nonsense is that government is to big and too many hands are in the cookie jar to have meaningful reforms done honestly or implementing it the best way. Government is in the business of punishing not fixing, corrupting not helping and taking not giving back.

    This whole scheme is a rape of the American culture, financial system and taxpayer.

  • Report this Comment On February 18, 2009, at 10:21 PM, Willy28 wrote:

    Oh well, it will all work itself out!

  • Report this Comment On February 18, 2009, at 10:25 PM, steveelcpo wrote:

    In a capitalist society, there is always the risk/reward motivator. You take the risks, you reap the rewards of success or suffer failure. What Congress did with the banking bailout in Sep, the auto bailout more recently, and any subsequent bailout(s) is reward failure. The CEO's in the banking industry should have seen the subprime crisis coming and taken action; that's why they get paid millions of dollars a year. They were arguably incompetent and failed, miserably, but we as taxpayers paid for their bonuses anyway. This begs the question; how many banking jobs could be saved with the $18 billion they allegedly paid themselves in bonuses?

    Detroit has been building gas guzzling SUV's for years as though gas would always be under $2/gallon and consumers would continue buying them. Did they not have any sense of urgency to build hybrid, electric, and other more energy efficient vehicles? Now they are paying the price. Not to worry, we'll bail them out too.

    With all that money we paid the banks so they could pay big bonuses, could we not have paid off many of those non-performing loans, helped the housing market, and made Obama and all the liberals feel good at the same time???

    As to corporate greed, I always vote against the CEO and Board of directors and any incentive package on the proxy statement just out of general principle because they are all overpaid. If everyone votes against these greedy bums, stockholders, as taxpaying citizens, can send a strong signal that their greed and selfishness is no longer acceptable. Further, holders of shares in mutual funds should bombard their mutual funds with requests on how those fund managers are voting the millions of shares they hold!

    The first condition of receiving taxpayer money in the form of a bailout should be the CEO is gone, with one month of severance pay and no bonus.

  • Report this Comment On February 18, 2009, at 10:50 PM, Hopingitsadream wrote:

    1) We all know that the best people to lead us have things in their closets (as all people do), that they do not want made public so the best do not run for office, thus we start out with less-than desirable politicians (those that say they have nothing to hide from the press just forgot what they did, but somebody usually remembers when they run for office). 2) My 6-year-old knows that when you borrow things and do not return them the value goes down because it must not be of importance if it is not wanted back that bad (Ft. Knox now has no gold for a gold standard). 3) My 11-year-old knows that printing Monopoly money with no regard for its support makes it worth less (and in the real world reduces everyone else’s had earned money). 4) My 14-year-old knows that when a government keeps hiring more people to work than is needed, taxes must go up to pay their salaries and more taxes must be collected/increased to pay their salaries (bankrupting the government with its own pyramid scam to get more votes, which eventually runs out of customers to scam [China can then literally buy the United States because they own the notes]). 5) My 16-year-old knows that people usually lie or exaggerate when they want something, why would politicians be any different (they’re not). 6) My 18-year-old knows better than to depend on anyone that lies over and over again (so why do we keep putting liars into office?). 7) My wife, a blond, has gone to our church for five years and knows every important thing about our pastor’s beliefs (so how does Obama go to a church for 20 years and not know the basic beliefs of his own minister? [he lied about his own religion and we still voted him in]). 8) Our babysitter, 15 years old, another blond, knows that when a business has too much overhead they cut expenses (yet Obama thinks that he can literally spend his way out of a recession [which is mathematically impossible by the way]). 9) My mentally challenged neighbor told me the other day that he’s puzzled because the C.E.O.’s keep getting millions of dollars for bad sales, wasting money, buying jets, laying off thousand of people, say the company is in trouble, and he wants to know why the C.E.O. takes twenty million dollars for driving a company into the ground (my neighbor does not understand greed and evil bad enough to screw their own customers, investors, and their own employees losing their pensions to pay that 20 million salary). 10) And me, an uneducated guy of 50, knows that it’s the job of the President of the United States to give uplifting speeches, to gather the masses in unison, to support the greatest nation to ever exist on our planet as other presidents have done in the past (yet after his speeches the stock market goes down! [tells me we have the wrong guy in there and we deserve whatever is about to happen]). 11) If we know that the government cannot make up unsupported money without making all the rest of money worth less, cannot spend itself out of a money problem, cannot bail out companies that have a PROVEN mistake track record that put them in trouble in the first place and do not fire the top executives that put them in that bad situation, and gives tax incentives to corporations to charge more, make less, and reward themselves for it. A) If any company takes ANY bail out money, ALL top executives are fired with no bonus!! B) Give all government departments one year to cut 10% of their budget, including military (if we can fire a cruise missile 1,000 miles out in the ocean and fly it 1,500 miles into a window, why on earth do we need a large army any more?? C) A flat federal tax of 15% would get rid of most of the I.R.S. D) No retroactive laws. E) All outgoing tariff charges are matched equally by the country that buys from us (the U.S. no longer makes a television, radio, and soon will not produce a vehicle [which is draining this country of vital funds by the billions per month). Otherwise I want my stimulus check for my 25-year company, and no one should pay their taxes until they get their check or stop the bailouts because they are spending our tax money to bail out my competition becasue they made mistakes and I did not, and isn't government competing with free enterprise unconstitutional?!

  • Report this Comment On February 18, 2009, at 10:59 PM, jesse2159 wrote:

    Although I agree that the bailout was a good emergency measure, I believe that we should now nationalize the major banks and AIG, provide a hardy good riddence handshake to the Corporate Boards of Directors, fire the CEO's, CFO's and "Risk Managers" while handing them copies of lawsuits filed against them for back pay and bonuses for failing to do their fiduciary duties to the stock holders, customers and the American people.

    Maybe then, the next batch of greedy slugs will think of doing something more honorable with their professional degrees like becoming piano players in a bordello.

  • Report this Comment On February 18, 2009, at 11:00 PM, otherwise6 wrote:

    Since I am worth about $33000.00 ($10 Trillion national debt/ 305 Million US population) and since the bailout is now law, which adds about another $3300.00 to my worth. A 10% increase! Would anybody be interested in buying shares of me? The way the government is spending money my value can only go up.

  • Report this Comment On February 18, 2009, at 11:04 PM, novahosting wrote:

    A very good read indeed. Shame on the naysayers who are so biased in their right wing propaganda, they can tell fact from fiction.

  • Report this Comment On February 18, 2009, at 11:09 PM, mike4757w wrote:

    I have read all of the comments and wonder if I know anything at all. I have a small business with about 30 people. We do not owe any banks anything. We struggle some to make ends meet when jobs are as hard to find as they have been. The one thing that I am sure of is that we try not to spend more that we make as for us that does not work. Banks are not to helpful if we wanted to borrow some money, but we do not think that is the right thing to do anyway. We supply health insurance to our employee's, we carry liability insurance so that we meet the requirements of our customers, and we pay our taxes and operating cost. If we should not make it during this time of job uncertanty I have been sure that there would not be any checks comming in the mail from any government agency in any amount. Yet, we have tried to be honest, and do a good job for our customers, but that apparently does not mean very much. If we fail 30 people will have to look for new jobs where there are none, and our 50 year old company will be gone. We thrive in a free market system where we are asked to bid most every job and we must get our price low enough to get the jobs. I have saved funds from every check I have ever received and in a quick few months 30% of that is gone. Now I must try to grow it back. So although I am very conservative and did not vote for this administration and did not like my choices with the other possibility I hope this plan works because some of us do not have as much time as others to recover. I am going to try my best to get my hands on some of the 13 or so billion that our state just got in the mail. As most of our government does they will spend it quickly and need more. With some luck we will still be here when this is all over. So while the rest of you try to decide who is to blame and why, I will pray for our country and our way of life, the preservation of our rights,and hope my investment are good ones.

  • Report this Comment On February 18, 2009, at 11:20 PM, egastrophe wrote:

    The fall of all great civilizations occur after greed and indulgence peak. The remaining wealth of America has shifted to a very small percentage of the population. The provebial rich get richer and poor get poorer was never more true as today, You and yuor children will not see a penny of this bailout but you will be paying for it for a long time. Banks, car companies should have been forced to sell their assets to cover their losses. Shareholders would have lost nothing more than they have already lost. America could have gained a new start but now has chosen to continue on a path of self indulgence, bigger bonuses, and greater greed.

  • Report this Comment On February 18, 2009, at 11:35 PM, mike4757w wrote:

    jesse2159, I agree and support you idea but I am sure you realize BofA has already been nationalized for all practical purposes. They were not given any choice on their purchase of mass debt by our govt and were told to close the deal and just like that it was done. Whether we like it or not, precedent has been set and is in place making room for more of the same as the govt sees fit. I like you belive if you do not run your business profitably and it fails then you close end of story. All of you have good points. I am learning alot.

  • Report this Comment On February 19, 2009, at 12:17 AM, 1stGradeStudent wrote:

    Economic theories and politics aside, you get more of what you reward and less of what you punish. Democracies last about 200 years because it takes about that long for the non-producers to figure out how to steal from the producers through the ballot box.

    There are many Americans who work hard, save their money, take care of their families, operate in survival mode and will now be asked to bail out the knuckleheads who can't connect two dots.

    A better solution than the Government's Stimulus/Investment package would be the suspension of the income tax for 2009 and beyond which puts money back in the hands of the taxpayers. Taxpayers represent the producers. We punish producers less and we get more production which is what really drives an economy.

    Government that can spend $20,000 for a toilet seat can't find its ass with both hands and a map.

  • Report this Comment On February 19, 2009, at 12:18 AM, trenton1ryan wrote:


    Please use your spell check before posting if you wish to be understood.

    Fascinating comments gentlemen-thanks (except to the guy who said "it will work itself out". Your last name isn't 'Little', is it??

    Whether we should abolish the Fed or not, I don't know (though I'll read the links-thx). But, things are murkier than they've been in long, long time-maybe ever.

    One thing that amazes me is that a lot of people still talk like this will all be over in a year or two. Even my wife is paranoid about not buying a house soon because she thinks a housing recovery is going to occur soon. We are in the first or second year of our 'Lost Decade'. I honestly believe that it will take us that long to get going again-maybe even to just get back to par.

    Gold looks better and better...

    ps-David in Qatar and some of you others: your level of understanding of what's really happening appears to be advanced. I think all Americans would benefit if some (or all) of you were to take that knowledge to Capitol Hill (so to speak) and try to expand the dialogue so Americans can stop allowing fear and propaganda make their decisions for them.

  • Report this Comment On February 19, 2009, at 12:23 AM, trenton1ryan wrote:

    < So while the rest of you try to decide who is to blame and why, I will pray for our country and our way of life, the preservation of our rights,and hope my investment are good ones.>

    Thank you for the above Mike. I will be praying as well.

  • Report this Comment On February 19, 2009, at 1:11 AM, relson wrote:

    Yes, we had to hold our noses and do SOME bailouts.

    No, Congress did NOT have to limit the upside gain for the Govt, aka "us", when the bailed out firms come back.

    No, Congress did NOT have to ok Paulson's unlimited ability to do what he wanted, aka NOT do what he testified he'd do with the $.

    What the corporations - AIG, investment banks- did with the money did NOT get credit flowing -- it supported their exec compensations, mergers, etc.

    If we REALLY wanted to help the system, I like Jon Stewart [Daily Show] of all people's idea -- his idea is for the Feds to give the money to the people with mortgages, they then give it to the banks with the bad mortgages. The banks wind up with the same money, the people wind up with clean credit.

    I know, people get money who made bad decisions -- but hey how's it better to give to the billionaires directly who made worse decisions, that burned us all?

    Also, I know it's harder to do this way, easier to give to the few big banks. But remember the old story of the guy looking for his key under the lamppost instad of in the shrubbery where he lost it -- because it's easier!!!

  • Report this Comment On February 19, 2009, at 1:12 AM, Clint35 wrote:

    Ok, I understand the banks needed help to prevent a total collapse of our financial system. Preventing something like that is a good idea. What gripes me is that a ton of money was handed to the very banks that caused the problem. I think big brother should've taken over the banks troubled assets and placed some type of gauranty on them. Then they could have sold, or given those assets to other banks that weren't in trouble. They could have prevented a collapse of the whole system and still allow some of the big companies to fail. They threw a bunch of money at C and AIG and neither co. is in any better shape for it. They should've been allowed to fail instead of being "helped".

  • Report this Comment On February 19, 2009, at 1:27 AM, Irishangel3d wrote:

    Although some of the big banks did come close to failure and may still go under, there are many other regional and local banks that did not participate in this type of behavior. If nothing else it is clear there were mergers that should not have happened.In both banking and other businesses.

    This has been going on for some time. Every time the government puts it's hand in to manipulate an industry trouble follows.

    Many years ago a bank in the Pittsburgh area of Pennsylvania was ordered by the court to make risky loans. This was a very conservative bank that had been sued for not making this type of loan. The bankers were stunned when they lost the case. Union National Bank of Pittsburgh believed their first obligation was to their depositors and shareholders. A few years later they merged with National City Bank., which has found itself with many risky loans and not any one in sight to bail them out! Finally Pittsburgh National Bank has acquired them. since that acquisition, PNC has had a loss of about 248 Million.

    There are several factors that need to be considered.

    Back in the old days you borrowed money from your local banker. After the great depression, regulations were put in place that restricted banks from making a profit from foreclosures. If you had problems your local banker would try to work with you until you could resume your regular payments if this was a temporary problem. Foreclosure was the last thing the bank wanted to do.

    A number of years ago banks started to sell the loans they originated. Now your local banker could be in Texas if you lived in Pa. This made it very difficult for the lender to know their borrower and sometimes left the borrower with a dilemma if their pay periods didn't come soon enough to make their payments. Now they had to send their payment as much a 1 to 2 weeks earlier to be certain it arrived at the bank on time so they would not be charged late fees. I finally resorted to registered mail return receipt requested to put an end to this on my mortgage, since the company had changed to a processing center in another state. They still tried to tell me they hadn't received it. I gave them two days, then I was going to the corporate headquarters with my evidence. I had signed receipts and mentioned the names . all the charges were removed.However this would not have been an option if the Corporate Headquarters had relocated. then I would have made copies filed a complaint with my state and hoped somehow to get it resolved within a descent period of time. A neighbor of mine had her loan transferred three times within five years to different banks.Each time they had changed her payment due date. She had mentioned this to me after the third transfer and decided to get a payoff figure and refinance elsewhere, rather than demand that the new companies adhere to the terms of her original contract and due date.For any problem she would find she had to go through many people to try and rectify a discrepancy. It sometimes took several days.

    Discounting and selling loans is not new. However, this latest crisis has shown how complicated it can become and how it could escalate to put banks in a very bad position as well as borrowers.

    In the old days property values were well known by the local lender. It would take a short period of time to determine value. When the lender is several states away from these neighborhoods, It would be difficult if not impossible to determine the true value of the property

    Then and Now

    During the Nixon Administration Americans were told to go out and stimulate the economy We sat in line to get gasoline using even and odd numbers from our licence plates

    During Carter's administration Treasuries were paying high interest. 1980's 6 month Treasury bills were paying 17% interest. People graduating from college had trouble finding jobs.they were few and far between.

    The environmental protection agency clamped down on the steel industry putting many Pittsburghers out of work permanently!

    We had corporate raiders who used leverage to obtain and sell off the assets of corporations. these are just examples.

    Times change, things change but people who are greedy and selfish never change!

  • Report this Comment On February 19, 2009, at 3:27 AM, Thunderbumper wrote:

    I thought we had elected a president with a plan to lead us out of this horrible bipartism economic mess that we have blindedly spent ourselves into with no supervision or oversight. Our political leaders have been "dumb dogs that will not bark" and our news media has been so busy pushing their far left "hate Bush" agenda, they didn't have time to notice or report what was going on at Fanny Mae and Freddy Mac.Add to that the greed of Wallstreet,Dirty Harry,Nutty Nancy and Brainless Barney and we do have a real mess.Anyway I thought Obama was a leader who would get a team of economist and ecoomic advisors to come up with a sensible plan to lead us out.His # 2 SCREW-UP as he calls it was turning our problems over to Barney and Nancy. Two thirds of their plan is nonsense and it only got worse when Harry and his lunitics in the Senate got hold of it.It now appears that Obama will just be the "water boy" and the mouthpeice for the same old gang with more of the same old same old.Yes we did vote for a change, didn't we? As I remember that,s what we got when Jimmy Carter was elected.I just hope Obama don't take any advice from Jimmy.We all know that he and Al Gre are full of it!

  • Report this Comment On February 19, 2009, at 4:54 AM, egobrain wrote:

    "too big to fail"

    Paulson used it as excuse. It is FTC fault for allowing "too big" businesses to exist. ATT was split by federal court into many businesses. Following that precedent all companies that required federal bailout should be divided.

    Awarding failure(February 19, 2009, at 1:12 AM, comment by Clint35) will not lead our country out of crisis.

    Internet bubble cost us billions,

    CDOs bubble costs us trillions,

    next bubble - quadrillions

  • Report this Comment On February 19, 2009, at 5:22 AM, egobrain wrote:

    Automakers bailout is different from banks and AIG bailout. Automakers are destroyed by unfair competition from foreign car manufacturers. In the price of domestic car are social security, medicare, federal, state and local taxes paid by US workers. Foreign manufacturers do not contribute to our retirement and taxes. Our tax rates would be lower if government collected employment tax equivalent on imported goods. US automakers bailout is less than taxes they pay. They deserve our support.

  • Report this Comment On February 19, 2009, at 7:47 AM, wolfecraig wrote:

    Richard, I don't mean to repeat what everyone else has already said, but.....

    First, although banks are not completely innocent in the failure, they are not and were not the root cause, our Congress was. Banks were told by FNMA and FHLMC to make loans to individuals that could not afford the mortgages. FNMA and FHLMC used their financial models through their automated underwriting systems to promote the types of loans and borrowers that they wished to have. The banks knew all along that these were not good loans, but they were told to make them or face charges of unfair lending practices. Our Congress mandated the standards to FNMA and FHLMC. So who is really to fault?

    Secondly, your assertion that "I believe executive pay limits and the risk of humiliation should help curb most excesses" is completely absurd. Who are you and who is our government to think that they have a right to limit executive pay and publicly humiliate anyone? It is the job of the stockholders to regulate their company. This is one big reason that we don't want the government involved in owning stock in private businesses. If they own any stock at all, they apparently feel that they have the right to dictate everything that goes on, regardless of the wishes of the other share holders.

    Thirdly, your assertion that "the bailout still looks successful so far" is just mind boggling. Where in the world did you come up with that idea? I guess

    the most frightening thing about your comment is that you feel that the same Congress that caused this problem is going to fix it.

    Each time that I read your comments I realize that I am wasting my time. I have so many more things that I could say. Each line of your piece is filled with absurdities, but enough time wasting for me. I am a Capitalist and I have a business to run.

  • Report this Comment On February 19, 2009, at 7:49 AM, 1stGradeStudent wrote:


    The problem you state goes away if we abolish the IRS and switch to a national retail sales tax. This tax then becomes punitive on consumption rather than production. No taxes on business (we pay them now anyway because they are hidden in the price of goods) or investments. The US becomes a tax haven for the entire world. When business does well it receives funding through investment to increase its production capabilities rather than borrowing. No reason to raise interest rates. Production does not cause inflation as Greenspan has suggested.

    There are many things that could be done which would be fair and make sense to get this country back on its feet and this bailout package ain't one of them because it is not just.

    Injustice is probably the root cause of violence. Crime rates are increasing. Today there's a line of 95,000 people applying for a concealed weapon or firearm license in the state of Florida. That's a vote of confidence?

    Obama continues to sell his bailout package as he flits about the country. Maybe he's trying to convince himself that it will work.

  • Report this Comment On February 19, 2009, at 8:44 AM, dbbfool63 wrote:


    To Much GREED and not enough time to have it all !!!

    To much MEDIA DRIVEN FEAR !!!

    Last, but not least, Too many CHIEF'S, and not enough INDIANS.


  • Report this Comment On February 19, 2009, at 10:44 AM, ZenMasterK wrote:

    I'm no financial expert. However I consider myself fairly well informed and possessed of a somewat higher than average degree of common sense. I can't help but wonder if the free market should have been allowed to reign and when the dust settled and the bloodbath was over, we would pick up what was left, fix it and move on, injured, but stronger for it. I know that may be a naive point of view. That being said, I know this:

    1. Something HAD to be done.

    2. A bad decision is better than no decision, especially now; and,

    3. From a Foolish standpoint, this is no time for the faint of heart.

    As Walt Kelly's Pogo said, "We have met the enemy and he is us."

  • Report this Comment On February 19, 2009, at 10:46 AM, hershalsavage wrote:

    "Few would argue that when Freeport-McMoRan (NYSE: FCX) builds a gold mine, it should be allowed to let cyanide leach into the drinking water of nearby towns..."

    Sean Hannity and many of his bathroom buddies would definitely argue that Freeport should be allowed to do whatever the heck they want to...

  • Report this Comment On February 19, 2009, at 10:59 AM, Pilotalk wrote:

    The government side of the equation can't be fixed in the short term. But term limits can hugely lessen the future impact of "power" and lobbyocracy

    Those who were most greedy, be they banks, investors or homebuyers must be allowed to rise from the ashes on their own, in their own time.

  • Report this Comment On February 19, 2009, at 11:39 AM, Chromantix wrote:

    David in Qatar is correct. There are many things which will help us (yet will never happen). If I may:

    1) Abolish the Federal Reserve (HR 2755)

    2) Set term limits on all elected officials

    3) Set a flat tax at 15% for 10 years before phasing it out completely

    4) Remove all party affiliation on voting cards - force voters to participate and learn who to vote for or STFU

    5) Demand 100% currency reserves for banks

    Fools, please do read up on Austrian economics ( Intelligent, money-minded folks would do well to look to a financial model which works.

    Dan in Germany.

  • Report this Comment On February 19, 2009, at 11:44 AM, bobbobwhite41 wrote:

    Humans have historically improved the small things of life over the years, but have not improved their attitudes and practices of the large, more crucial things at all. These are the large things of life that must be done right for continued existance. And that neglect and disinterest will be eventually fatal to all of us as a result, and not that far off.

    Examples of the small things are shelter, transport, clothing, food, fun, etc. Some examples of the large things are continued benevolence, honesty, honor, justice, fairness, unselfishness, brotherhood, nature husbandry, social equality and population control. We don't even try to improve in most of these areas as we only care about the here and now of our own selfish, individual lives.

    When you finally realize that the parents of today are living their carelessly wasteful and polluting lives totally ignorant or purposely unmindful of the fact that their own grandchildren's lives will suffer tragically as a result of the selfish and uncaring way they themselves are living and treating this earth, the above cosmically true point is made very clear.

  • Report this Comment On February 19, 2009, at 11:45 AM, heartoninc wrote:

    If we ran our businesses the way the government runs this country we would all have been bankrupt, and rightly so, a long time ago.

    We now find ourselves condoning and even rewarding and supporting bad behavior.We have done that for years in various ways but now it has reached epic proportions. Every citizen is expected to pick themselves up and start fresh when they fail.We should expect nothing less from the government and from the banks.

    Accepting responsibility and taking the consequences is the price for letting greed run amock for so long.Shame on us all for cashing in on it and voting for people who looked the other way while lining their own pockets.Nobody has left their office yet poorer than when they first took it and we helped them to do it.

  • Report this Comment On February 19, 2009, at 1:00 PM, 1966boiler wrote:

    I would like to use a quote attributed to A. Lincoln to decribe.Pelosi, Reid and Obama and a few others.

    They are first rate, second rate people.

  • Report this Comment On February 19, 2009, at 1:25 PM, jbromet wrote:

    At this point in the financial meltdown of America, Barack's experience as a community organizer comes into play. He views the people that bought a house with no means of paying for it as the downtrodden community that has been exploited by the rich folks. Therefore, his policies are intended to bail them out of their situation. Notice, however, that he makes no concessions to the people who have to foot the bill. The 90-95% of people who bought a house they could afford, who played by the rules, must subsidize those who worked the system. The appeal being made by government (D.C.) now is not so much a financial responsibility but a moral one. This is because no one knows if the"stimulous bill" willa actually help anyone. So, we poor smucks are obligied to help those who are irresponsible. I donate money and clothing to the poor. I do it voluntarily. I put it where I think it will do the most good. What makes me angry is having my pocket picked by Washington and given to "who knows" without any accountability. Ultimately, if Americans stand still for that, they'll get what's coming. There will be wailing, moaning, and the gnashing of teeth as the Bible says.

  • Report this Comment On February 19, 2009, at 7:47 PM, CMFTomBooker wrote:

    Mr Gibbons,

    I find myself in the unusual situation of agreeing with almost everything in this post. (The "almost" is a natural reflex, you nailed it.)

    Capitalism has blind spots. (Oh, the ideologues have already discounted you.;) I love capitalism, but I also like those lines they paint on roads, and stop lights at intersections. Yes, they slow me down, but it helps prevent driving from being demolition derby.

    Ideologues have their answer before they get to the question. "Improvise, adapt, and overcome" is sometimes the best answer. Some things which work very poorly, might be just what you need in a jam. Because their unwelcome side-effects may be more temporary, and less frightful than the "jam: itself. The solution should fit the problem. Problems never present themselves in an orderly military fashion. They sometimes need the unusual to solve them.

    Yes. The financial system needs to be further stabilized, only because we let those rats get in a position, in which they have a gun at our head. There will come a time for retribution (reaction to CEO salaries is just a symptom). I like an idea similar to the one you suggested for AIG. As we wind down from the frantic, we calmly take a look at each financial entity, decide if they are a truly independent and self-sustaining organism. Or is The Living Dead, still standing by virtue of strangers' kindness. And if so, put nets around it and calmly, cooly bring it down. Yes, it would still be painful, but them living in such a state is not healthy for all of us in the long run.

    I didn't understand the significance of the gov't in markets, until I watched the Treasury and Fed begin "Guarantees". And continually change and add that which they would guarantee.

    People do not like to invest in markets, unless they feel that market forces are in control of value.

    In summarize it in investor's terms. With the Gov't in your secondary debt/credit market, and the bond market in general......

    Sell everything you have which the government guarantees.

    Then try to figure what the government will guarantee next, and buy it.

    Try not to play in the equity market, if they are in there. (Which they are, but just in one area) Because you can't tell which companies are really alive, or way past dead, were the government not propping them up. ;)

    Good piece, Mr. Gibbons

  • Report this Comment On February 19, 2009, at 9:14 PM, zinchkah wrote:

    I do not think there was any confusion in the intial article that was written.

    I think the author stated exactly what he wanted to say: to "ensure prosperity we must...bailout the banks, increase regulation and stimulate the economy". The article is further developed with

    "our regulators dislike regulation" ( I take this to mean that only the benevolent politician is capable of setting guidelines to run a busines. They only want business to be righteous and ethical so they will just make a few teeny-little ol' regulation to help guide the degenerate populous since they, the politicians, are the only one's with morals). Then there was a narrow revision of history of the success of the New Deal.

    I think it was clear you said what you wanted to say. You are only trying to retrack your article after getting "called out" on your principles. I think your principles are that of a biased Obama- loving-liberal. Prior to the election there was a lot of this same innuendo. Now after the election it appears to continue. I think you are attempting to retract your statement because you are afraid your customers may get to upset, therefore you try to back off.

    1. Be principled and stand-by what you say. Do not be the typical wish-washy liberal and change your stance because you are being called out on it. It is clear you want regulation and only the government can do it.

    2. You should give a proper counting of WHO wrote those mortgage regulations that cause the entire system to swirl down the drain (Barney Frank and Christopher Dodd- both democrats). Last time I checked the government is not afraid of regulating. Your comment was just twisted and disgusting. Liberal spin.

    3. Why did the country come out of the depression? The government policy or something called WWII???

    I am disgusted with the liberal spin that is so obvious in the major "news" networks. Anyone can say anything but it does not make it real. The current fad is to flat out lie, behave badly and blame others for their actions. Prior to the election it was apparent you were going to use your website to spin, when you could. Today you are still trying but are being called out on it and you just do not have the b***s to standby what you wrote.

    I will let my Motley Fool subscription wind down and I will not renew. I do not need my thinking directed. I do not need my thinking politically directed by an organization that I have paid money to for economic information.

  • Report this Comment On February 19, 2009, at 11:20 PM, mike4757w wrote:

    Again, tonight I am very impressed with what you all write. I find that I am pleased that many of you know what I believe to be the real story. Lending institutions were directed to make loans to customers that could not qualify for the loan. That was the Carter administration. Look it up. The Clinton administration then required a higher % of customers had to be given these loans. In 1999, September 30th an article was written in the New York Times by Steven A Homes. This article predicted the mess our country is in today. Very insightful. I am sure some of you have read it. My belief that the news media had completely played everyone into a drunken stupor was wrong. But I do believe that the media (news media is not correct) perpetuated the most successful mind control of their captive audience and personnel destruction of people undeserving of their wrath. We should all be very afraid of this misuse of such a powerful tool. But, back to the question at hand zinchkah I believe you are pretty close. I have to agree. All of you have done very well I continue to expand my old mind. See you tommorrow.

  • Report this Comment On February 20, 2009, at 11:18 AM, brwn8484 wrote:

    What ever happened to the New Messiah that was supposed to be an agent of change and lead us out of the slavery of economic crisis.

    First, he pulls a Depression ERA "me too" and passes the largest Ponzi.. oops bailout ever conceived. Then he backs out on NAFTA reform. Now he is telling us we need to bailout out all the idiots that could not or would not pay their mortgages. At the rate were going, we will be a third world dictator run Statist Empire within 10 years.

    None of what our leaders have done is anything new. Just more Tax and Spend Liberal Pork Barrel spending.

    What saved us from the Depression was WWII not all the political gesturing and theft by bankers and politicians. Unemployment stayed at 25% even with all the socialist spending plans. Wake up America. Join the Chicago Tea Party and act like you can think for yourselves. We have given enough money to the idiots. I say let the chips fall and let the crooks pay for their criminal behavior.

  • Report this Comment On February 20, 2009, at 11:25 AM, slakk wrote:

    "We have laws because complete free markets neither protect people's rights nor result in a stable society."

    Reminds me of what happens in Thunderdome at Bartertown.

    Two men enter, one man leaves.

    Break a deal, face the wheel.


  • Report this Comment On February 20, 2009, at 11:26 AM, Cmbol wrote:

    Is there anyone out there who believes that most of our politicians are more wealthy as a result of holding elective office? Can anyone be so naive as to think that politicans (both parties) have the interest of the taxpayer at the core of their decision making processes? What we will see will be a huge amount of government waste with a few dollars going to productive resources that will create jobs and increase the countries competitive capacity.

  • Report this Comment On February 20, 2009, at 11:45 AM, JRP65 wrote:

    The bail out is all you hear about. Wake up it won't help us at all unless you fix the banks and credit market and get credit flowing. Without credit company's have no game plan!! Without a game plan we all lose.

  • Report this Comment On February 20, 2009, at 11:52 AM, oftoftoft wrote:

    Your comments related to how FDR managed the Depression are a typical sham. Unemployment fell because so many people were working for the government (CCC etc.). When the government cut these programs, as they could not be funded forever, unemployment fell back to +/- 20%.

    Had WWll have not occurred, we might well still be in the depression.

    Direct action (other than freeing up markets) cannot make everyone rich or even middle class, but it can make everyone poor.

    Without members of congress actively supporting and promoting sub-prime loans (see B. Franks), this situation would never have been nearly so bad.

    Some say that this or that institution is TOO BIG TO FAIL. Is our county TOO BIG TO FAIL?

    The direction we are heading will cause our country to fail!

  • Report this Comment On February 20, 2009, at 11:56 AM, skat5 wrote:

    The airline industry serves as a good example of the market distortion caused by bankruptcy filings. Airlines filing for chapter 11 received relief from creditors, allowing them to keep operating and competing with airlines that avoided bankruptcy, but not for long, as the unequal competition (between those continuing to pay their bills and those being allowed not to do so) drove additional airlines to file for "reorganization". The losers were everyone who worked at the airlines and the investors. The winners were the "reorganizers", those who made the deal and took whatever was left to take for themselves (these same bankers and equity firms that find themselves on the brink).

  • Report this Comment On February 20, 2009, at 12:09 PM, americanwhiner wrote:

    Please see today's NYTIMES article by Obama bans gimmicks, and deficits will rise" by Calmes. This stimulus bill is a drop in the bucket compared to the unaccounted-for squandering that went on during Bush's administration. We're screwed, all right, but the screwee and his buddies have their feet up in Texas sipping lemonade, This is Bush's depression.

  • Report this Comment On February 20, 2009, at 12:10 PM, jkjacksonhole wrote:

    Several of the response discuss debt and one refers to the alst 30 years and the Bush adminitsration.

    there is no comparison During the Reagan era deficits were an average of 1.8% of GDP.

    During GW itwas an average of about 2%.

    Under Obama the projections are deficits over 10% of GDP and national debt heading from 30% of gdp to potentailly over 100% of GDP.

    So blaming the Republicans is just not going to hold water.

  • Report this Comment On February 20, 2009, at 12:10 PM, JohnDimitri wrote:

    Oh! Now you've worried about the National Debt! Where were you for the last 8 years in particular and the last 30 years in general? If nothing else, we will have something tangible to show for all the spending.



  • Report this Comment On February 20, 2009, at 12:20 PM, anotherway wrote:

    This stimulus is the same trickle down economic theroy that has not worked since the Roosevelt years. The tax dollars that the Obama administration is passing out are our tax dollars. I have a new econimic theroy that is the opposite of trickle down. I call it the Bubble Up theroy. In this theroy, the bailout goes to the people as opposed to big business. This money would be used for paying off the debt that the American public has accumulated. This money will go to the banks who now have more money to lend. Now you have to regulate the lending standards, tighten them up even more if you will and force the people to save money before they buy. Go back to the time that you needed 20% down to buy a home, Make a buyer of a car put 50% down. The American public could do this because the government bailed them out and got them out of debt. Some Americans would even save money and invest it for their future. This bailing out of the businesses, is garbage. If the street sees $.10 for every dollar that Obama is talking about, it will be a miracle. I believe that 75% of Americans would do the right thing with the money the other 25% are the people who never knew what to do with money in the first place. I think that the cap on this bailout should be $250,000 per homeowner. Principal residence only. If you own a second home and your primary residence is paid off you get a reduced bailout. If you don't own a home you recieve a reduced bailout. Investment properties don't count. I don't know the exact numbers, but what I do know is that what we are doing does not work. The definitionof stupidity is to continue to do the same thing over and over expecting different results. It's time to change the economic thinking and get it back to the people who make this thig work, the people who buy things in our country, the consumer. If the consumer goes away, the economy falls.

  • Report this Comment On February 20, 2009, at 12:26 PM, skat5 wrote:

    "Prove me wrong

    Refuting the article requires evidence that the banking system would not have collapsed without the bailout, or that America would be fine with the collapse of its financial system"

    The author should entertain the possibility that the banking system IS collapsing in slow motion and has been doing so ever since Tim Geithner decided to let Lehman collapse (the 'no legal means' to save it lacks the ring of truth) because he wanted to make an example to others about "moral hazard". Now TG is Secretary of Treasury, which does not restore investor confidence, given his previous bad judgement. What he has done since then (stall for time) has further damaged confidence.

    Restoring confidence may require slowing the rate of decline in home prices by finding ways to enhance demand through sufficient short term incentives (e.g. buy an existing home this year only, getting a federal 50 year mortgage at 4 percent, only 10 percent down required; granting lifetime visas to elderly foreigners who wish to retire in the U.S., provided they buy a home; enforcing owners of vacant foreclosed properties to maintain them to the standards of the neighborhood plus perhaps providing them with other disincentives if they hold the properties rather than sell them at a loss) while allowing supply to shrink (no help for the builders). Other confidence builders: create a new SEC under the FBI, not hiring any of the lawyers from the old SEC. Return the uptick rule (it would not be that hard to make it work, claims are baloney) for short selling and increase the vigilance on having the shares in order to short. Re-enact something like the Glass-Stegall act; it might need to be modernized a bit, but if it had been in place, some would argue this whole fiasco cound not have happened. If you want to do a stimulus, come up with a visionary goal that is truly big and bipartisan; e.g. free North America from dependence on foreign energy by 2020.

  • Report this Comment On February 20, 2009, at 12:37 PM, BuildMWell wrote:

    From the original article:

    "Possibly the most common concerns were variants of this comment:

    It is absolutely impossible to get a good long-term result from government consumption.

    Put aside the fact that the government has been consuming resources for centuries, and that America has been spectacularly successful. The main problem with this argument is that it's entirely ideological."

    Here I must beg to disagree wholeheartedly.

    It is not ideological to recognize the truth. The truth is: Socialism here in America has only succeeded because we fund it with Free Enterprise Capitalism. Think about it. This is not a "Chicken and Egg" puzzle. Capitalism comes first...and it always has to come first. Then, the socialists can talk about how to share the wealth.

    In other words, America never has agreed to social reform without giving Capitalists a way to pay for it over time. This time around, that proven plan has been tossed out the window and the Capitalists are not cooperating. Capitalists can easily spot a scam...and they are seeing one put forth as I write this.

    The real question is, "Who will lend America the $3 Trillion our government is trying to borrow to bail themselves out?" Are you willing to buy 10-year U.S. Treasury Notes paying 2.7%? How about 30-year Notes at 3.7%? Some fools tried that 50 years ago and just look what happened. Interest rates soared and by 1982 they were over 18% while inflation approached 20%.

    I am not anxious to do that again. But, that is where we seem to be heading. Low interest rates are good for the borrower...not for the investor. That is, unless the investor is the borrower. But, our government has never been in business to make moeny...that is not their goal. The solution is for the government to send us the money and Iwe will grow it over time AND pay it back with interest. In return, we will send an IOU to the government and collateralize it with our assets. No new debt...just a change in the liquidity of the assets we own.

    I would recommend that the government send you some money...if you have a positive net worth and a proven track record of building wealth. Let us Capitalist continue to do the heavy lifting, just as we have for the past 150 years.

  • Report this Comment On February 20, 2009, at 12:45 PM, leohaas wrote:


    I think your original article and this explanation are excellent! However, the responses should not have taken you by surprise.

    Almost all economists agree that a bailout was necessary. They only disagree on how such a bailout could best be implemented. The public at large is clueless about the Iceland-like collapse we barely avoided because of the bailout. Many of them come with political opinions or use micro-economic arguements to make macro-economic points.

    This general cluelessness should not surprise us either. Just look at two other issues in today's society from the expert view and the public opinion view. Both are clear indicators of how clueless we all are.

    First is the theory of evolution. A recent survey showed that 39% of Americans believe in it. Among scientists, however, the validity of Darwin's work is rarely in doubt.

    Second is global warming. Roughly half of Americans think that is not real, even though climate experts can prove with temperature data that the earth is warming. The only thing climate experts do not agree on is to what extent the warming is the result of human activity, and if there is anyting we can or should do to reverse it.

    It is not a coincidence that the opponents of the bailout are also on the wrong side of these other two issues...

  • Report this Comment On February 20, 2009, at 12:52 PM, foolishbroker68 wrote:

    The worse thing that could have happened would be to do nothing. I am a Republican but Laissez Faire' economics does not work. Have we forgotten Adam Smith and the 'invisible hand?' The problem we had is that the invisible hand was twiddling it's thumb!

    Unfettered capitalism will lead to a series of boom and bust cycles which is exactly what we have had. The government bailout in spite of the name is not going to create a stimulus that gets us back to previous economic levels. There was too much bogus money in the economy and we need to stabilize the economy and give the markets a chance to absorb some of the excess. I think more than anything else for the American people to regain confidence in the system we need to see some of these people that committed crimes and fraud to go to jail and never see the light of day again. There is often a comment that we do things for the greater good. I think some of these executives need to be removed and banned from operating a public company and we need to see Mr. Madoff behind bars. The sooner these things happen the sooner we will see things stabilize. The economic pieces are in place, what we need is to restore confidence in fairness of the system.

  • Report this Comment On February 20, 2009, at 1:02 PM, produxman wrote:

    I completely concur with your analysis. The folks who want the bailout to be "terrible" or to fail are simply putting politics ahead of the country's best interests. Clinging to failed policies got us here. The bailout isn't perfect, and reflects plitical compromise. But it's way better than any of the alternatives.

  • Report this Comment On February 20, 2009, at 1:04 PM, timkop wrote:

    You have three compents in our current society. The captalist that say give the rich tax breaks and reinburse their money they lost in bad business practices etc..... The socialist give us a free lunch we don't want to work for anything anyways, so just keep the checks coming in... Last and least soon the independent frustrated disappearing working class, these people are paying for the bailout while their savings is being evaporated. Just keep us emplyed so we can continue to feel good and pay our own way.

    At some point Washington will realize its' in everybodys best interest to keep America moving forward. The bailout should be spent directly say 90% on projects that keep the average worker employed in some capacity. Use it Energy Independence, Construction, Public Service, Etc.. This will keep us employed, spending and acclerating the economy.

    Do not just give handouts to the ignorant lenders that make bad decisions, or to the lazy saps that really are not interested in work. Create directly funded construction employment, domestic sourced energy independence projects (wind power, electric cars, alternative sources or domestic material sources), and public necessary services ( EX. teachers that actually show the youth that will get a job, how to save and buy a house and car with an actual down payment).

    Or keep status quo and print money till the presses break down and no one is left employed to fix them.

  • Report this Comment On February 20, 2009, at 1:12 PM, dhuddle wrote:

    Great article, and the prior one too.

    I'm sick of dogma and ideology guiding critical national decisions.

    I think a lot of the people who complain would complain no matter what, simply because Obama is a Democrat and not a Republican. Where are their solutions? They are the ones who caused a lot of this problem (they will say "There's lots of blame to go around" and I know the 2 deregulation bills Clinton passed contributed, but for the last 8 years Republicans had control). A lot of the problem goes back to dogma -- "All government is bad." and "All regulation is bad."

    What's your solution? To let the economy collapse? Don't give me that crap about it being "natural". I think those who say that must not work or have a secure job -- I doubt that you own a business that is being affected by all this.

    To those who say they don't want government, I would say "Tell me specifically what you would get rid of and how much that would save?" And don't say "Waste" or "Bureaucracy", we all agree with that.

    The military, police or National Guard?

    The SEC?

    The FDA?

    The CDC?

    Public streets?

    The patent office? ( I might agree with changing those rules which limit competition).

    Social Security?

    Public schools?

    Even Charles Munger just wrote an article about the need to restrain the negative impacts of unregulated capitalism. There's a reason a lot of thigs are regulated. There was a reason for the Glass-Steagall Act. The reason insurance companies are regulated is because of past abuses. We can see what happens when we allow insurance to be called "Credit Default Swaps" and not regulated.

    Let me say clearly to those of you who say all regulation is bad: you're idiots and it's time people say so without mincing words.

  • Report this Comment On February 20, 2009, at 1:33 PM, xian70 wrote:

    The initial bailout was intended to prevent the freezing of the credit markets. The bailout came in the form of loans.

    The new bailout is spending. Lots and lots and lots of spending... not loans.

    The bailout may be "great" in the sense that lots of government spending may permit the clever opportunities to vacuum up those hundreds of billions of dollars... did I just sau that... hundreds of billions of dollars?

    However, as the example of Japan has shown us massive Keynsian styule spending does nothing to revive an economy but goes a long way toward creating a lot more debt.

    The stimulus is a spending bill - not a stimulus package. Spending that isn't going to happen the short term cannot, for shame, be called stimulus spending.

  • Report this Comment On February 20, 2009, at 1:35 PM, xian70 wrote:


    please point out what economy with more regulation than ours has suffered less economic hardship than ours due to that increased regulation

  • Report this Comment On February 20, 2009, at 1:38 PM, madasheck wrote:

    You point out that this bailout is not just, but necessary for survival. However, I see nothing much anywhere about punishing those responsible, and taking away their ill gotten gains, such as the huge salaries and bonuses of those running Fannie Mae, Freddie Mac, the super banks, and the rating agencies that foisted these bundled loans on to the public. Also, there seems to be little inclination to expose the polititians who started this fiasco by forcing banks by law to make sub-prime loans (unheard of before the CRA), and funding ACORN, the liberal, non governmental organization who made sure the banks were making "sufficient" numbers of sub-prime loans. Of course we know WHY the pols did this - to buy votes of non taxaying voters. So now the saving, paying taxpayers are being forced to buy McMansions for folks who can barely pay rent.

    We may "have to" put up with this injustice, but I think we should also have the right to bring the perpetraters to justice, if only to ease the pain.

  • Report this Comment On February 20, 2009, at 1:39 PM, freuchie wrote:

    To those who say they don't want government, I would say "Tell me specifically what you would get rid of and how much that would save?" ----

    Department of Commerce

    Department of Education

    National Endowment for the Arts

    Department of the Interior

    Federal Reserve

    Dude, look some up for yourself:

    And by the way, cut Medicaid, Medicare, and

    Social Security in half. (Oops, I guess people

    will have to take care of themselves. How horrible!)

  • Report this Comment On February 20, 2009, at 1:42 PM, jrosiak2 wrote:

    Now that the right-wingers have lost control they seem to be trying to prevent the return of consumer confidence which would lead to the success of the stimulus program. The Cheney administration doubled the national debt to give tax breaks to the wealthy who probably invested the money in the market. Now that their money has been lost we are left only with the lingering debt.

    The American people want change. That's why Obama was elected. The only way that we will see how the program works is to wait and see. I think it's a lot better to create stimulus than to pay unemployment. This way a lot of the money will come back as taxes.

    I think that the republicans know that the economy will start to rebound by mid-year and cannot stand the fact that the democrats will get the credit.

  • Report this Comment On February 20, 2009, at 1:52 PM, xian70 wrote:

    Americans do want change and the got it. Problem is that it cost all of us $800,000,000,000.00.

    The economy will start to rebound but its going to have very little to do with the "stimulus" bill considering that the bulk of the spending will occur after that point in time.

    NO ONE - is trying to prevent a return to consumer confidence. The GOP tried to pervent spending on an unprecedented scale for programs that we know don't work - see Japan in the 90s.

  • Report this Comment On February 20, 2009, at 1:56 PM, anotherway wrote:

    If you want this economy to revive, the consumer must have more money in his hand to pay off debt.

    Remember this term..... "Bubble up economics"

    The money goes to the bottom and bubbles up to the top of the economy.

  • Report this Comment On February 20, 2009, at 2:08 PM, mogwaipr wrote:

    Can anybody admit that capitalism has its flaws?

    You can't fight inflation by the emission of more money for the value of the money in circulation as soon as the new money is released is automatically devalued.

    Can you watch this video on google videos? Its called "Zeitgeist: Addendum" has very interesting points on flaws of capitalism. Im no marxist, Im no advocate for the Venus project either but this video might enlighten economists on thinking out of the BOX.

  • Report this Comment On February 20, 2009, at 2:11 PM, jkjacksonhole wrote:

    "Bubble Up" and people trying to make us think the Reagan Revolution did not result in 35 years of incredible growthworked.Also those of you trying to convince us that Bush was a big spender need to look at the facts not that I approved of all his failures to veto Democratic budgets presented to him. You people are a joke and probably have made little in your lifetimes.

    Gimme the millionaires and billionaires building homes and buying their lifestyles any day over this social prognostication. Their spending habits create the jobs that are being lost. We will miss them.

    This return to Keynesian econ has never and will not work. It never has and never will. There is not a successful realistic economist that believes in Keynesian theory. Do not quote Paul Krugman. he has no credibility.

    The only movement out of this quandary will be the reduction of government and the return to concerns about productivity instead of spending.

  • Report this Comment On February 20, 2009, at 2:14 PM, brewman30 wrote:

    BLIND SPOTS? What a crock! Let's take a brief look at the example cited in your article:

    If a company were leaching cyanide into drinking water, the federal regulators would be the slowest to respond. Rather, because of capitalism, lawyers would swarm to capitalize and punish such a company in both the civil and criminal courts, in conjunction with local law enforcement. Moreover, more responsible companies would have a leg up in the competition by virtue of running a cleaner, safer business.

    Federal regulators on the other hand would come in, after the fact, impose a overreaching regulations and delve into far more than the problem that would no doubt have already been cured by lawyers and local law enforcement, local/national bad PR, and cleaner/safer competition. Moreover, capitalistic investors will not continue to support companies such as that used in the poor example, because of the risk of total loss or devaluation of their investment, because of PR, lawyers, criminal penalties and fines, and competition. Further, under such circumstances, it is entirely foreseeable that insiders (managers and directors) could be personally liable both to the public that was harmed, as well as their investors, for malfeasance. The entanglement of a bunch of federal beaurocrats making regulations that are well-intended, but too far reaching, further distorts the market, by creating additional compliance costs and reporting requirements for companies that were always on the up and up.

    Further unintended consequences of such regulations often forces smaller, but law-abiding companies to alter production methods or business models and sacrifice cost efficiency, making them less able to compete in the free market . . . .

    I'm sorry, I think your "Blind Spot" point is entirely fallacious; but nonetheless appealing for its shock and outrage value, which probably causes many to overlook its fallacious nature.

  • Report this Comment On February 20, 2009, at 2:15 PM, AMCarter3 wrote:

    My issue is with the inflamatory, negative title you choose for this article. Articles like this are self-fulfilling prophesies. When all you do it look for the flaws, all you are going to find are the flaws.

    The real issue is that when Motley Fool authors publish their views with inflamatory titles like this one, it has the potential to have a LOT of influence on the general mindset of the investing community. You have a bit of a "bully" pulpit.

    I feel it is flat out irresponsible to be passing judgment on what the Obama administration is trying to accomplish after only one month. After 8 years of Republican mis-management of the market and banking regulatory functions in our government, let's give Obama's team a fair chance to turn this economy around!

  • Report this Comment On February 20, 2009, at 2:15 PM, cydcyd wrote:

    In about a year...We need some nice honest folks/

    In every city to take up a collection from all the CEO"S & anyone who cashed in on large bonus checks...After all they had been paid the big bucks for ...TALENT

    Maybe we can pay-off China & anyone else we owe

    The Big Bucks too.

  • Report this Comment On February 20, 2009, at 2:16 PM, 1green1 wrote:

    Some of the comments on this article indicate a deep trust in ideology over reality. Even Milton Freedman, the most vigorous advocate of the free market since Adam Smith, identified the critical role externalities play in the operation of markets. That is the central lesson of the "tragedy of the commons".

    The system is our invention and it should serve the goals and objectives we establish as a group. What has not been clear for many years is what those goals are. We argue regularly over the means without discussing the ends. Is it any wonder we can agree on so little?

  • Report this Comment On February 20, 2009, at 2:16 PM, TenthCircle wrote:

    On October 29, 1929 the mighty engines of capitalism ground to a halt..

    All mythology aside, they did not begin to run again until December 7, 1941.

    Then as now the cause was a financial system that was more than above the law it was the maker of the law.

    There is no foe left to fight that is big enough to get us out of this mess.

    The Banks must finally go to the special place in Hades that has been readied for them since Jesus threw them out of the Temple 2000 years and paid for it with his life.

  • Report this Comment On February 20, 2009, at 2:16 PM, davesarmor wrote:

    I am convinced the Obama administration is deliberately wrecking the economy and scaring everyone so all asset types will go down in value and reduce the wealth of the upper classes. They can prop up lower classes with labor unions and Bailout money to create a new middle class socialist society

  • Report this Comment On February 20, 2009, at 2:20 PM, woodturningguy wrote:

    Anyone who has been through economics 101 knows that virtually everything in our markets is based on emotion. Feeling good or bad about something has a direct influence on how markets move. Regardless of whether the bail-out is a good thing or a bad thing, those who undermine its success by constantly throwing cold water on all things not Republic dogma, are doing a real disservice to our nation and their children.

  • Report this Comment On February 20, 2009, at 2:27 PM, ItsALie wrote:

    Mr Gibbons exhibits the typical "One Way Street" thinking; I am right, you must prove your theory. The beneficiaries of this FIVE TRILLION dollars -and counting- are tickled pink with you/us taxpayers generosity and gullibility. There is no accountability or morality left. They (govt. and banks) pulled off the S&L scam so well, what did you expect down the road? This is what the country voted for and has voted for for a long time Don't be cursed with the burden of honesty, figure out how to survive - and profit - in this environment.

  • Report this Comment On February 20, 2009, at 2:28 PM, dlcapo wrote:

    This is making me DIZZY.


  • Report this Comment On February 20, 2009, at 2:29 PM, Savannahguy wrote:

    Accidentally posted on the last Gibbons article blog on the bailout subject. Clipping here:

    Richard Gibbons makes good points in both of his articles on the bailout.

    Unfortunately, they are too few and far apart. Evidently Mr. Gibbons hasn't read the financial history and understood the cause and effect of FDR's "New Deal" or that he turned what may have been a short recession into a full blown depression that lasted for years. That's what government and socialist leaders do. Remove the middle class and capitalist incentive so that everyone needs them and their government.

    New Deal was a bad deal, just as "Stimulus" does nothing to stimulate anyone that invests in anything.

    Go back and read the books, Richard. Be sure to take your rose colored glasses off before you do. And please report back to us after you've learned what really happened in non-revisionist history.

  • Report this Comment On February 20, 2009, at 2:37 PM, DividingByZero wrote:

    "Refuting the article requires evidence that the banking system would not have collapsed without the bailout, or that America would be fine with the collapse of its financial system."

    Actually, it should be up to *you* to prove that the bailout prevented a financial system collapse, or that the financial system would have collapsed without it. You see, there was a bailout and no collapse which is not evidence proving the financial system would have collapsed without a bailout.


    (And sorry if this has been pointed out before...)

  • Report this Comment On February 20, 2009, at 2:40 PM, Lawnturnips wrote:

    Wasn't the bailout originally supposed to address a) "toxic" assets, i.e. bad mortgages and

    b) Lack of confidence in the US credit market?...rather than the opposite, as seems to have happened? It's easy to say "It could have been worse", but since it seems that none of the things that were done addressed any of the problems they were supposed to, the claim "It could have been worse" reminds me of the joke about the guy scattering strips of paper out of his train window to keep elephants from attacking the Vermont. "See how well it works!" he said...

  • Report this Comment On February 20, 2009, at 2:42 PM, brwn8484 wrote:


    Good Point. We would have less trouble if we followed that rule.

    Break a deal, face the wheel!

  • Report this Comment On February 20, 2009, at 2:45 PM, nosympathyhere wrote:


    You are violating the first rule of holes: in order to get out of one you have to first quit digging deeper.

    I am tired of rewarding the crooked ones with my money and sticking the rest of the bill to future generations.

    How about some prison time for AIG executives and all the others as far up the food chain as nessery and even in to the government who have all been this bed together? The only thing we are teaching anyone is that reckless behaviour will result in reward from those who have to pay for this mess.

  • Report this Comment On February 20, 2009, at 2:52 PM, soaringman wrote:

    Very good and balanced thinking. Capitalism is great but done without stewardship of this world and it's people it easily becomes little less than pure greed.

    It's time for us all to be adults.

  • Report this Comment On February 20, 2009, at 2:53 PM, Lawnturnips wrote:

    Oh, whoops...I didn't see DividingByZero's comment. He is quite right. That Mr. Gibbons claims, without any evidence, that the bailout saved the financial system, does NOT make him right. The closest one could find for evidence either for or against this claim is to examine the history of other government bailouts to see their effect. The Great Depression does not really bode well for direct government intervention in the economy. If they had bought up all the houses with bad mortgages directly, rented those houses to their occupants and proceeded from there, i.e. provided a safety cushion for the victims, rather than the perpetrators, I would have slightly more confidence in government involvement, but as it is, they seem to be working hard toward protecting the system that caused this in the first place, a system which, it should be noted, was largely supported by government by means of the CRA act, among others.

  • Report this Comment On February 20, 2009, at 2:56 PM, nohumor wrote:

    I amazed myself by sticking with it to read through all the posts although at the rate they're coming in I'll never get through all of them. I have learned a lot and scoffed a lot. Although this isn't a self-help column, I can't help but wonder what is the average middle-class guy (I think I fit in there) supposed to take away from this as an action item? Somewhere up the string someone commented on the number of applicants for handgun permits; so should I bunker up and hunker down? No of course not. Should I start killing all bankers (heck, why be picky, the list is so long); tempting as it is as a virtual act, no, I don't support that approach either.

    So, assuming at some risk that I still have a job on Monday when I head back to the factory, what does mr. middle class do to avoid being hit by big freakin' boulder if he's trying to keep food on the table and heat in the house? The massive level of this problem gives me the answer: not a damn thing. I learned a lot from all the comments, but the best thing I learned is that there really isn't much hope in the short or long term. Since I'm in my late 50's, I'll be out of money before the big guys but their turn will come long before I recover, and most likely I will be dead first. A slow, ugly death.

  • Report this Comment On February 20, 2009, at 3:04 PM, Lawnturnips wrote:

    It's true that capitalism unrestrained is rapacious, but having the government come up with thousands of regulations proposed by lobbyists and congressional staffers does not seem to help the economy. Maybe we need to figure out a way to insulate government from being unduly influenced by ANY lobbyers other than constituents.

    We could also try set up negative feedback mechanisms to keep companies under control. For example, in the case of oh, gold mines, if the regulation sates that housing must be built at the mine site and occupied by senior management of the company, I reckon they'd be spending more time keeping toxic waste under control than they do now. Similarly, nuclear reactors safety features would be a lot more rigorous if the safety inspectors and senior management were required to live on-site. Industrial plants, including coal and oil power stations, could have air and water intakes just downstream and downwind of their exhausts...its a lot easier to clean up a relatively small volume of industrial waste than it is to clean up all the water that is used for an industrial process. Part of the problem is that regulations requiring expensive cleanup, etc. just have their expense passed on to the consumer. If, on the other hand, you HAVE to clean up your act or the business can't function, there is more incentive.

    Of course, all of this assumes that government is not an appendage or client of various special interest groups...never mind. I don't know what I was thinking of.

  • Report this Comment On February 20, 2009, at 3:07 PM, drpgleeson wrote:

    One of the many depressing relevations in the current mess is the degree to which financial observers, both amateurs like myself and many of my fellow posters on this blog, but also supposed professionals like the pundits on CNBS, see the financial world only through the distorting lens of their a priori political views. Having a political view is fine; having a philosophical view (in favor of an unfettered free market, for example)--this is all fine. But it has little to do with political analysis. When you have a pre-existing belief system and use that to interpret real world events--that's a religious view, not an economic analysis. I think today's Motley Fool response to the hand-wringing over the earlier article is reasonable; many of the viewer responses seem beyond unreasonable to the point of an SNL skit, like the proposed "solution" that began with these helpful suggestions: a) abolish the Federal Reserve, b) repeal the Federal Income Tax and c) repudiate the National Debt. Please.... Let's try to keep this forum grounded in adult observation and comment.

  • Report this Comment On February 20, 2009, at 3:16 PM, brianlawson223 wrote:

    the fact that you consider rebutals as loathing tells me you are a liberal and not truthful. I thought that this site would be one to take criticism. I guess that that was wrong. anyways we hate your piece the 'bailout is terrible' as one that needed to be re-released. High taxes for the govt. to throw down the hole is not American. Nobody who buys and sells stocks does not want the negative to be an automatic dumming down of the private citizen and be a victory for the govt. The govt. is supposed to protect our civil rights as citizens and not have the need to negate our finances because of our wise decisions. High taxes is bad all the time unless you are protected from such. The Kennedys and the Clintons come to mind. I will admit that since the days of Teddy Roosevelt who came up with federal lands to be protected and not for private citizens to object to, as socialism. Thus because of the seemingly harmlessness of protected federal land allowed the Federal Govt. to take away our rights and punish people whom the Govt. considers too rich or too sucessful. Bill Gates is totally liberal because he will not be taxed like everyone is.

    One way I can tell if someone is liberal is when he/she throws out lies and trash and gets accused of such, will throw out his consternation and labels critics as belicose and against his free speech. What about conservative speech. Political Correctness is a form of censorship of patriotic Americans who are worried that the liberals someday would do a modern day goulag and Bolshevism is warranted. That is why there is an outcry to this so-called good business and wise decisions thought police(liberalism) idea.

  • Report this Comment On February 20, 2009, at 3:17 PM, CaptCmnSense wrote:

    Like my father always said. Don't worry about what you have no control over. All we can do is become debt free, never take on unnecessary/excessive risk, save at least 15% of what we earn and treat others how we would like to be treated.

  • Report this Comment On February 20, 2009, at 3:20 PM, Lawnturnips wrote:

    There's no "magic bullet" short or long term, for the problems of living in society. You will hear people say "Invest in gold", "Invest in stocks", "Invest in mutual funds"...but in the end there are two rules that I have followed, cynical as they are.

    1) The only people you will ever meet who have YOUR, as opposed to THEIR, interests at heart, is yourself and your grandmother (if you're lucky:) Anybody else always has their own motivations. I don't mean this in a cynical way, or to imply that they wish you ill; simply that the only person you can trust to ALWAYS want to do what's best for you is you. Other people, altruistic or dedicated as they may be, will want to do WHAT THEY THINK is best for you, which isn't the same thing at all, at all. Brokers and stock analysts, bank managers, etc. don't even have THAT much motivation.

    2) Do your own homework, and keep a clear mind when doing it. Decide on your goals, and stick to that. If your goal is long-term growth aimed at retirement, don't put all your money into a single "wonder stock". More to the point, do your own checking rather than take other people's recommendations. FInd out about investing, about the specific companies that you want to invest in, about the history, not only of the company, but also of the field of endeavor. Not only that, think about what the future "could" bring. Some companies look great at the moment, but a little thought points out that there future isn't looking too rosy. I wouldn't invest in a record company in the hope of long-term growth for example, but on the other hand, oil and energy stocks might not be too's gonna be a long time before we give up all oil and gasoline, if only because we would need to replace 300 million cars.

    A lot of people say "Oh, well, I don't have time for that...I'll get an expert to do it instead." To which I answer...with the possible exception of Warren Buffett and a few others, the world is littered with "experts" who, it turned out, were just riding the crest of a wave, and crashed along with it. There's a reason why stock brokers are rich because of salaries and not investments, and it's the same reason that casino owners are rich because of gambLERS rather than because of gambLING.

  • Report this Comment On February 20, 2009, at 3:23 PM, digeratidave wrote:

    When the going gets tough the tough go shopping!

    Hopefully they will come back with new infrastructure and not new shiny shoes.

  • Report this Comment On February 20, 2009, at 3:32 PM, timdaniels7 wrote:

    One of the logical fallacies in this "defense" of your prior article was, "Refuting the article requires evidence that the banking system would not have collapsed without the bailout." The real burden of proof lays at your feet, as it is impossible to prove an event that NEVER happened, nor in a free market (i.e. not Iceland) WOULD happen.

    Second logical fallacy: though there may be some blind spots in free markets, your article does nothing to demonstrate that these are more dangerous or burdensome that the "blind spots" of political control or intervention. The recent "stimulus" is nothing but political blind spots that should be regulated.

    Third logical fallacy: your Iceland example presumes that the short-term pain in Iceland is more harmful than the long-term pain in the United States, as we travel down this socialist utopia. History cannot be read in the present. Instead look at Russia, China, India, Cuba, etc.

    Last logical fallacy I will point out: "It is absolutely impossible to get a good long-term result from government consumption." This statement is correct, but in your dismissal, you argue that we've been doing spectacularly for years. This misses the fact that government consumption is not the CAUSE. While dismissing this idea may be called by one with Keynesian tendencies as purely ideological, history has proven free market theory (again, look at Russia, China, India, Cuba, etc.).

    I think you'd be better served to renounce the main of your previous article and admit that you were having a bit of Obama-infatuation inspired loss of clarity--or risk losing the confidence of many Fools (while gaining the praise of many fools).

    Put aside the fact that the government has been consuming resources for centuries, and that America has been spectacularly successful. The main problem with this argument is that it's entirely ideological. It fails to address the issue at hand and provides no evidence. Though there may be great reasons for believing this point of view, the argument is only convincing to someone who already shares the same beliefs.

  • Report this Comment On February 20, 2009, at 3:38 PM, Lawnturnips wrote:

    It's sort of funny reading about 8 years of republican mismanagement of the economy over the past 8 years. If the last time the Dow was this low was 6 years ago, doesn't that mean that the Republicans made the economy improve over the last, I guess, 5 and a half years? And didn't the collapse start around the time of the primaries and elections, when both parties were doing their best to undermine public confidence in the system? And weren't Democrats in charge of Congress since 2006 and did nothing? And didn't both parties marginalize anybody who had any ideas other than same old, same old. And didn't the Democrats attack Republicans for running up huge deficits? And are now complaining that the Republicans are objecting to the same thing, in between speeches on how they would be different? And wasn't the public hugely behind both wars at the time? And isn't the government supposed to reflect the will of the people? And aren't the Democrats supposed to be against elitism and support everyone being able to afford a house, and the idea that credit checks, etc. show discrimination? And aren't the Repiblicans supposed to be in favor of small government, due process of law, and freedom for people? And aren't we spending $50 billion a year on homeland security and $600 billion a year on attacking countries for no reason? For that matter, leaving aside questions of impractical renewable energy, aren't we spending as a people more than a trillion dollars a year on buying oil from countries that want to see us destroyed. Maybe we could spend some of that money finding practical alternatives. If we have to spend all that money, why not subsidize ourselves rather than out enemies?

  • Report this Comment On February 20, 2009, at 3:51 PM, michaelbinCA wrote:

    I recall my grandmother (circa 1955) telling stories about her grandparents who passed on stories of their grandparents who came to the New World just after the Revolutionary War. You see, they were NOT Episcopalian, Jew, and/or Influential Catholic. So, when the numerous downturns (actually shakedowns) in the economy occurred during the mid-to-late 19th C, my ancestors suffered greatly, having to give back to the egotistical. They were creative, inventive people, who managed to become wealthy at times during the their lives. No, they were not artists per se, but inventors of agricultural products and machinery (an uncle had something to do with the original round hay-bale, which to some may seem trivial but to those who know better, this was a big deal.). They were very distressed during the mid-19th C when the Marxists hit the New World from E. Europe. These people, cunning as just about anyone, had great influence on the poor and downtrodden, who came to the New World with nothing but a potentially large ego.

    Now, my ancestors were far more tolerant than yours truly. I know what I would like to do but will not comment further other than to say that THEY can only poison just so much Tylenol. Sooner or later, WE will have to take care of ourselves. Please check out the percentage of the pain-reliever market that the parent company controlled just prior to the poisonings of 1982.

    Again, WE need to learn to take care of ourselves.

  • Report this Comment On February 20, 2009, at 3:54 PM, michaelbinCA wrote:

    "An idealist is someone to makes others prosper." Henry Ford I.

    How many times have you read about someone telling the reader how it SHOULD BE?

    "The way it is, is the way it is. You don't have to be good, you have to be first." Michael Boyd 1977 (just after the United Way people in Ottumwa Iowa gave Mr. Boyd LSD-25.

  • Report this Comment On February 20, 2009, at 3:55 PM, radicalcapital wrote:

    Here is how to fix things:

    1. Return to the gold standard, abolish the Federal Reserve and return to the system of free banking that once existed.

    2. Abolish the Department of Education immediately.

    3. Freeze all non-military federal spending immediately (i.e., no more automatic increases in programs like Social Security, for example).

    4. Create one last regulatory agency: the Deregulation Agency. In an orderly fashion, its job will be to end all the alphabet soup of unconstitutional programs and agencies that now exist (i.e., those that attempt to interfere in the free market by transferring wealth).

    5. End all corporate taxation and have individual income taxes reduced to a top rate of 25% (with more cuts to come as the Deregulation Agency gears up).

    This is just a start. However, none of this will be done, or even imagined. Why? Because the influence of bad philosophy has completely degraded the people's ability to think and understand basic principles, especially economic principles.

    We are living in a new Dark Age because the ideas of people like Richard are taken seriously.

    The Radical Capitalist

  • Report this Comment On February 20, 2009, at 4:03 PM, hopelost wrote:

    Just where is all the money coming from to sustain all of Obama's promises?

    More foreign debt?

    Like so many politicians that borrow to pay today's

    debts and leave the problem of repayment to their successors, i.e., the U.S. taxpayer, Obama seems to be falling into that trap.

    Obama has the opportunity to become a great president,

    yet, I foresee the U.S. becoming more indebted to foreign nations to fulfill all the promises he has made.

    Our debt to foreign countries (Fall, 2008):

    Japan, $585.9 billion

    China, $541 billion

    England, $307.4 billion

    OPEC Nations*, $179.8

    Caribbean banking centers**, $147.7 billion.

    *Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, U.A.E., Venezuela.

    **Bahamas, Bermuda, Cayman Islands, Netherlands Antilles, Panama, British Virgin Islands.

    Check these figures again in two and four years.

  • Report this Comment On February 20, 2009, at 4:10 PM, grouphero wrote:

    To lend a helping hand to the house owners particularly those whose property value is negative, a low interest rate similar to FED fund rate may be very helpful.

    - the monthly payment based on the new lower rate means that a big portion will contribute towards the principal

    - the home owners will not want to sell the house at depressed price in view of the lower rate as renting a house may be even more expensive

    - the market will react immediately by stopping the drop or reducing the speed of the drop of house value

    - the principal repayment means the net value of the house will increase with time and the negative value situation will greatly reduce in 3 - 5 years time or even shorter if the value of the house appreciate

    - there is no subsidy to the general public and the issue of equality to all is out.

    - the lower FED fund rate is the same to the bank and as the bank cannot help much, why not consider other alternative like above

    - there is no pressure on the money needed, as the lower interest rate does not require the gov't to pay out trillions of dollars like the bailout package

    - the housing market and the sentiment will greatly improve

    - new buyers will come into the market to take advantage of this lower interest rate as who will rent and who wants to wait anymore

    - the house price improves mean the toxic assets will reduce and the cycle will continue to improve

    - the lower monthly payment means the public, at least some of them, have more money to spend and this will help the consumer spending

    - this will lend some help to the retail and also the commercial/retail properties owners which are facing tremendous problems right now

    and the chain effect goes on and on ..........

  • Report this Comment On February 20, 2009, at 4:15 PM, winbuks wrote:

    You can all continue to complain but that will do no good. Or you can spread the idea of an actual free market solution to this problem.

    NONE --- again I say NONE of the politicians are interested in fixing this. They only want to add to their own power and grow the government

  • Report this Comment On February 20, 2009, at 4:15 PM, rpprnotashrddr wrote:

    Nice peice... glad you stuck to your guns Gibbons.

    So many meatheads out there can't ever read between the lines, and take thoughts out of context or in such a literal context that deep messages go right over their head.

    ...what makes a company do the right thing??

    ...they have to have the threat of breaking the law or the threat of their precious image being tarnished.

    It's too bad that companies have to be chained to the fence like a bunch of rabid dogs but that is just the case. If there isn't a law on something they will eventually exploit what the missing law, or oversite fails to address. Laissez-faire would be great, if corporations could actually handle the freedom responsiblely, and not do somethign like, take on such on such idiotic bets at such a monumental volume that it can sink the whole country.

    Government intervention is required, if not this country would have been swallowed by greed a long long time ago... and we'd all be fu(king peasents.

    "Every sin is the result of a collaboration" Stephen Crane

  • Report this Comment On February 20, 2009, at 4:19 PM, markofzorro wrote:

    Looks like more bad news in the short term and most of the comments seem to be from ideologues who don't get it that the business cycle is trending down.

    I agree that it is appalling to bail out fat cats and I am saddened that Obama is continuing the Bush/Paulson policies.

    That said, we need to let the market do its work and minimize the pain: slow, but do not prevent banks and inefficient companies from going bankrupt. Insist that the rich pay their taxes, not hide their money abroad.

    We need to restore trust in our values and financial system. Our citizens Including me) and many abroad now see our system as corrupt "socialism for the rich, capitalism for the rest of us." Honesty, fairness, and equity are the American way. I am profoundly troubled that so many comments advocate against them -- or advocate simple ideology as the solution to complex problems.

    If our markets continue to be fixed in favor of the fat cats, the rest of us -- and the world -- will eventually remove our money. It is better to put your money under the mattress than into the hands of unrepentant financiers who see nothing wrong with paying themselves billions in bonuses for running their companies into the ground.

  • Report this Comment On February 20, 2009, at 4:21 PM, NoahVaile wrote:

    The real problem isn't the private sector at all.

    The real problem is that with government (read "our") money there comes government control(s), requirements and mandates. The very things that got everyone in trouble in the first place. But ten times worse.

    This is a (democratic) congress' creation and this so called "bailout" is nothing more than nationalization, socialization if you will. The government can't do anything correctly and now it will be in a position to run businesses it knows nothing about, putting the control of those businesses in the hands of personal friends and cronies.

    It is a raping of our economy by politicians for the pure purpose of pandering for and purchasing votes while making themselves rich, all in the name of democracy.

    The "stimulus package" had virtually no stimulus in it, most of the money won't even be spent for at least two years. That money being spent now is to go to effective deadbeats and radical-political friends of the congress. That is the purpose and design. Job creation is very short term. Virtually non-existent.

    This is a travesty. It is a trillion dollar theft from the people by a radical out-of-control congress and administration... with more to be stolen.

    If they really wanted to stimulate the economy they'd pass a budget (not "continuing resolutions") and then declare a total 100% tax holiday for six months, with reduced taxes phased in after that time. THEN you'd see a stimulated economy!!

  • Report this Comment On February 20, 2009, at 4:21 PM, skat5 wrote:

    I would like to comment on a few arguments I hear in the media and parroted in some of the comments here, that seem to me to be irrational. These argurments I have paraphrased but put in quotes.

    "Previous administrations created huge deficiets, so one should not question the advisability of this one."

    --Better to argue the situation is entirely different. However, what was missing then (pick your 'then', such paying for the Iraq/Afganistan wars) and now is any sincere call for sacrifice on the part of the American people. Instead, we seem to be calling for the sacrifice of future generations. Example: new employees at car assembly plants get maybe $15/hr while their future is hostage to health care plans and benefits by those guys who got $50/hr and did not safe any of it. What kind of 'union' is that? One lacking credibility. Now the time has come for shared sacrifice and those unions would rather see their younger bretheren go jobless and hungry rather than give up the benefits that helped (along with incompetent management) destroy the U.S. car industry.

    "All homeowners suffer when homes in their neighborhood are foreclosed upon"

    How long do these homeowners suffer? If the home is foreclosed upon one day and sold the next, I do not think there is much suffering, at least of the silly kind of watching the lawn of a neighboring empty house turn brown, as Pres. Obama so disingenously described in his speech in Mesa AZ this week (about half the lawns in southern AZ are always brown, depending upon whether you planted a winter lawn or a summer one, and can afford to water it). The truth is that home values drop when a home in the neighborhood sells at a lower price than the previous price. That is the truth of what it is presently worth. Everyone needs to stop hiding from the truth. Our homes cannot be sold for as much as they could be sold for in 2005. Lenders foreclosing and refusing to sell at current prices are hiding from the truth. The sacrifice that we must make, and that our leaders must help us make, is to be brave and face the truth. You are not 'trapped' in your home if you owe more than the home is presently worth. You can default and move somewhere else and rent. The truth is that you are broke and cannot afford to buy another house until you save enough money for a down payment. It will probably take you seven years, as it took me, to save enough. If you got your house with nothing down, then the truth is you did not save. Easy come, easy go. Accept the truth that you could not afford that house, and go back to renting. Pres. Obama needs to stop talking about the 'dreams' and start talking about 'realities'. I put the 20 percent down so I would not have to pay the Private Mortgage Insurance, I saved for the rainy day when I might be out of a job so I could keep paying. I have watched my neighbors buy new cars every year or so, while my car, bought used, approaches its 12th birthday. Can you imagine how I feel when I hear this 'bubble up' suggestion that those who spent their money on frivolous luxuries I have forgone should be handed money they have not earned because they have not saved?

    This freezing of the credit markets started, way before Bear Stearns and Lehman, with Merrill Lynch hiding from the truth about the liquidity of certain finacial instruments. Merrill Lynch, a despicable but curiously well-respected brokerage firm that is no more, chose not to sell these instruments once the prices turned down, so they would not have to mark them to market. If there are no sales, one can pretend that items have held their value, when the truth is otherwise. This subterfuge lasted for a year or so, until too many admitted that the Emperor had no clothes.

    "The stimulus is not perfect, but we need it"

    This goes along the lines of Senator Schumer's statement about Americans not caring about a few "porky little items" in the 'stimulus bill'. Actually, I think most of us want to see our country succeed for ourselves and our children and because we do care, we want to see EVERY DIME spent in a responsible fashion. There is a big difference between buying a fashion accessory and buying a solar hot water heater or insulation for your home. One makes you feel good for a few weeks and the other saves you money that can be spent on future purchases, not to mention making the world's air cleaner and possibly reducing the importation of foreign oil. It really matters how the money is spent. It is a lot of money. It shapes the future. This is where the call for sacrifice needs to be made; not to spend the money on sports stadiums or extended unemployment benefits or re-establishment of welfare enititlements (yes, they reversed Clinton's welfare reform, get ready to welcome back the multi-generational welfare family). There is no 'sacrifice' in tax rebates or tax cuts or federal hand-outs. Are our leaders so bereft of judgement and statesmanship that they cannot discern the difference in benefit between funding a geothermal power project and funding a museum for sports memorobilia? And no, there is not enough money to do both. Not nearly enough.

  • Report this Comment On February 20, 2009, at 4:34 PM, amoobrasil wrote:

    As Richard Gibbons expected, responses opposing his comments have been bereft of cogent argument and workable proposals. Also, as he expected, they have consisted mostly of the use of labels like "socialist" in lieu of arguments, of ideological platitudes that are true only to those who accept them without question, and--worst of all--some personal attacks. Such spleen reflects the lack of class characteristic of hate talk like that of Rush Limbauth.

    All of these worn tactics go on and on not because people are not intelligent or knowledgeable, but because their emotions override their capability to reason. As was my case in Brazil as a Peace Corps Volunteer constantly assaulted by "leftist" and Communist ideological platitudes, anti-American slogans, and just plain hate, the facile corporatist rhetoric of these folks who most likely mislabel themselves "conservative," is so simple and so predictable, that I can spew it as easily as they. None of this is constructive; indeed, ideologically straight-jacketing one's thinking is unproductive, regardless of the left-right spectrum with which one may identify himself.

    I eschew all ideology. I am a free thinker and a pragmatist. I judge ideas, theories, and policies by whether they work and how well, not by how an ideological doctrine insists they be viewed.

    The Fed is not to blame for this crisis. The cause is lack of oversight in the form of ideological opposition to regulation; the underfunding of agencies like the SEC and IRS; the competetion-defeating mega-mergers and buyouts; the failure to distinguish between speculation and investment; the squandering of taxpayer money on overpaid, underfunctioning (and sometimes totally unneeded) government contracts; and true investment in health, education, infrastructure (incluing renewable fuels, rapid-rail transit, livable, walkable communities where people do not have to get into an automobile to buy a loaf of bread).

  • Report this Comment On February 20, 2009, at 4:45 PM, Dannish wrote:

    None of us succeeds or fails in a vacuum. We have combined strengths and weaknesses. As a society we chose our combined objectives and decide how to prevent crimes, diseases and our economies. Often this requires the contribution of group resources and the assistance of those at greatest risk.

    The government will not get us out of this but it will channel our resources to where our representatives believe they are needed. That's the best we can do and thank goodness we have a mechanism to assist getting these things done.

    These are reasonable responses to an extremely uncertain situation. They are much improved to those hands off decisions that allowed the creation of tons of toxic non-assets which most of us did nothing to protest let alone did anything to remedy.

  • Report this Comment On February 20, 2009, at 5:01 PM, MichaelPelletier wrote:

    Few would argue that when Freeport-McMoRan (NYSE: FCX) builds a gold mine, it should be allowed to let cyanide leach into the drinking water of nearby towns.


    Usually when such companies are allowed to let such things happen, it is when the justice system - intended to serve and protect everyone equally - is corrupted to serve and protect only the interests of the rich and powerful.

    This is not "capitalism," or "free market," it's oligarchy.

    A "free market" solution to cyanide leaching is a lawsuit, fairly adjudicated, that puts a stop to such a violation of the property rights of the mine's neighbors and restores them to their original pre-leaching condition either physically, financially, or both.

  • Report this Comment On February 20, 2009, at 5:01 PM, beaconps1 wrote:

    I would say that the real villain is the mis-use of leverage. Leverage has already greatly distorted the economy. We have had many crises and at the bottom you will find the mis-use of leverage.

    We confuse capitalism with our money supply. We can't have a Free Market money supply. You can't have a money supply leveraged 100 to 1 which is what the shadow banking system was allowed to do.

    Leveraged demand corrupts the balance of supply and demand. Leverage capital corrupts asset valuations and introduces not easily calculated risk although the risk is up front and present.

    You all know about momentum investing, what do you think about it? The housing debacle was a good example of momentum investing that rode the positive feedback loop. Now we are all riding the negative loop down. This is not a morality play.

    Some economists are looking at pushing the whole mess off a cliff and starting a new banking system where banks succeed by helping individuals and businesses to succeed. Much like the local bank model only on a larger scale. Not a bad idea.

    There are other aspects of the economy that need attention for recovery. Leverage has caused havoc in other sectors, like energy.

  • Report this Comment On February 20, 2009, at 5:06 PM, lftrogg wrote:

    You are all SO negative. King George said our economy would be fine. Condi said our economy was resilient. Don't you trust them? You don't trust Congress? This is a once in a lifetime, wonderful buying opportunity. Ignore the obvious, trust our prez and Congress, and BUY, BUY, BUY.

  • Report this Comment On February 20, 2009, at 5:12 PM, glashoppah wrote:

    "There's nothing inherent in capitalism that prevents [irresponsibility on the part of corporations]."

    False. There is, and it's called "boycott."


  • Report this Comment On February 20, 2009, at 5:21 PM, tsdc7 wrote:

    I'm surprised at the victim mentality expressed by so many purported Rugged Individualists. You aren't being robbed by some separate entity known as Government. You are a member of a society with a social contract. As a member of this society you either actively or tacitly condone the social contract. We have a representative government. To the extent that the government runs up a debt, banks make irresponsible loans, or the government spends money irresponsibly (or responsibly), it is a reflection of what we allow. If you don't like the accumulation of debt or torture to be conducted in your name, do something about it, change our social contract, or go somewhere else (exit this social contract). In any case, don't absolve yourself of responsibility for what happens in OUR country in OUR names. Good grief. Get off the cross; we need the wood.

  • Report this Comment On February 20, 2009, at 5:27 PM, downunder68 wrote:

    Greetings Fools,

    I am most impressed by the readership comments, be it wether i agree or not, and it shows some great passion about what is happening at the moment, the post by brwn8484 on Feb18 at 7.10pm should be looked at again by all and do some research on the money system and system of control.

    The reference to Jekyll Island is also one i will be following up on, i can't help but feel that this whole thing is manipulated to shift control of the world power into the hands of a few thousand, be it that i am paranoid by finding what i have been looking for or that i can see a plan coming together, who know's, but this financial crisis will be played out as the powers that be wish.

    I am finding it hard to distinguish between Marxism communism, socialism and capitalism and feel that we are giving up our hard fought rights to FREEDOM whilst our security is being taken over by big brother, before we know it, if we are not already there, serfdom seems to be our destiny, even here in Australia we are affected by events that take place in America, even though not directly linked, the intertangled web of financial derivatives and investment affect confidence of a population to spend and even borrow conservatively, we don't have an over supply of housing here and in fact the opposite is true down under.

    Here are some words to google and see if there is some kind of link to it all, or wether i am just being paranoid and having a self fulfilling prophecy.

    New World Order, Illuminati, order of the Skull & Bones (Bush, Clinton, Bush), IMF, FEMA, United Nations Charter, Knights Templar, How Money Is Created, the Fed Reserve act of 1913, Money Masters, Free Masons, Rothschilds, Rockerfellers, Joseph Schipp, and many other spin offs from these, such as the Canada, USA, Mexico free trade union, and the by-passing of your constitution in getting the agenda's through.

    Good Luck in getting out of this mess.

  • Report this Comment On February 20, 2009, at 5:32 PM, KayG2008 wrote:

    Getting tired of hearing excuses for the socialist thinking that is growing and continuing in America. Keep making excuses but think about this...

    Sixty four years ago Norman Thomas knew what was going to happen to our country in 2009....

    Norman Mattoon Thomas (November 20, 1884 - December 19, 1968) was a leading American socialist, pacifist,

    and six-time presidential candidate for the Socialist Party of America .

    The Socialist Party candidate for President of the US , Norman Thomas, said this in a 1944 speech:

    "The American people will never knowingly adopt socialism. But, under the name of "liberalism", they

    will adopt every fragment of the socialist program, until one day America will be a socialist nation,

    without knowing how it happened."

    He went on to say: "I no longer need to run as a Presidential Candidate for the Socialist Party.

    The Democrat Party has adopted our platform."

  • Report this Comment On February 20, 2009, at 5:47 PM, loudaws wrote:

    For years ,Banks have been making no down payment mortgages to people who have no ability to pay, without any kind of of good investigation of income.Due diligence has been ignored. This is bank fraud on the part of both the bank and any broker and the home buyer, and should have been stopped long ago.

    Now the tax payers are having to pay the bills, by law.

    Would the banks fail other wise? We will never know if that would have been worse because we dont know

    that it will work. If it dosen't, we will have to pay more. In either case it is still redistrubution of wealth.

    No recovery plan will work unless all abuses of the system be corrected by the same plan. Send the bastards to jail, for a long time . Fix the abuses, or they will surely be repeated in a few years. Why ?

    Because there will always be tax paying Suckers to

    pay the Price. The first law of Obama.

  • Report this Comment On February 20, 2009, at 6:04 PM, taxmomof3 wrote:

    Seriously, after reading this article I'm wondering why I just joined the fool! The guy should be fired, for his comments. He should go back to college and study Econ 101 and Psychology 101. Somewhere he missed those lectures.

    As mentioned by many the credit crisis was not a result of the free market, it was a result of the government forcing credit on noncredit worthy people.

    Our country has managed to get itself into too much debt. You can't grow a country's GDP on debt and expect it to continually increase forever. The average american saves negative $. Americans can only spend so much into debt, before they begin to crumble. Once their spending sharply decreases, down goes GDP and the economy with it.

    Seriously did we really think Americans ability to keep spending so much would increase...that their amount of debt could be endless and not adversely affect our economy.

    We killed our economy by too loose of credit...which was gov't problem, not the free market. We should be happy if the credit markets tighten up a bit. Obviously businesses need credit, but they should not be gov't mandated to be so loose. And obviously Americans need to spend, but not with consumer debt.

    The worst part is Gov't thinking debt spending is going to fix the problem. I'm just waiting for the gov't to crumble, because it has too much debt. Do we really think it's debt can be endless too?

    As for taxes...income tax is a fraud to Americans. We are paying tax on our income and the income tax for businesses. Honestly their tax is built into the products. Shame on Obama for trying to think we can suck it to the businesses by taxing them higher. He's only hurting us the consumers and American businesses.

    Income tax penalizes those who save. Flat tax places a heavier burden on the middle class. It's a bad idea and does not simplify the tax code, if people think it does.(I have a Masters in Accounting-Tax. The definition of income and expense is the problem, not the rates--Have you seen the tax code to try to define these things? We'd still have the same problem with a flat tax. If Americans only knew how much money goes into this ridiculous system on the gov't and business side to comply with and get around it. What a waste!) A national sales tax like the fair tax is the way to go! It will help our businesses, and it will significantly reduce the huge direct and indirect expenses gov't and businesses have because of the income tax. Also it encourages better behavior for consumers!

  • Report this Comment On February 20, 2009, at 6:04 PM, titanicdwn wrote:

    It's just more playing with numbers until the government runs out of numbers. I stand by my claim in prior articles that economy will suffer a deadly blow in 2010. Furthermore, states which this country can no longer afford to maintain will be invited to leave the Union. Civil war is totally unnecessary, unless a state attempts to remain in the USA in order to keep receiving aid. Maybe we should consider offering CA and others a lump sum payment to get out.

  • Report this Comment On February 20, 2009, at 6:10 PM, InternmentCamps wrote:

    DEBT is KING! According to the Foreign Bankers that ARE the Federal Reserve. Who needs to fire a shot when they can own a majority for the price of a couple of Senators. Have you noticed how AAA rated companies take bailout monies when they just sense the "threat" of tighter credit markets, and when in Jan. there was no big problem. Now they are voting for 23% instead of 40% shareholder vote to call a meeting. GE. A controlling influence need no longer be a majority. Next the slice-up ? There need be no sleight-of-hand when all is done in front of blind eyes and the dumb.

    Re-Mortgages are being offered even to those that are only in fear they are in danger of default. An opportunity to be controlled. The Nation will have given up ownership and the only place it will be listed is on the back books. Next the US/EUR- the US entering in a discounted position. Plans? Take over the World ( consolidate under one Cartelian ownership ) -- it is already in place and growing. They may as well have blown off 40-80% of everyone's body parts instead of our savings - then we might cry out.

  • Report this Comment On February 20, 2009, at 6:18 PM, Libertarian71 wrote:

    Why does MF continue to let Gibbons publish his Keynesian hooey?

    His latest dishonest defense of the bailout article does NOT mention the CBO report, which states that all of this government spending will RUIN the economy, and result in LOWER GDP. Why no mention of this in your latest article?

    He also fail to mention that at least 4 Nobel Laureates in Economic Science have come out strongly AGAINST the bailout and stimulus package.

    His article does NOT address the problem of moral hazard caused by the bailouts.

    His article does not address the MASSIVE amount of national debt that is being created. Who is going to pay for this, Mr. Gibbons? Your grandchildren? Mine? Shame on you, then, for publicly advocating such generational theft and immorality.

    He also fails to address the criticism, made most prominently by University of Chicago Law School professor Eric Posner, that the bailout is illegal in that the Fed is NOT stautory empowered to take equity stakes in companies like AIG. Ever read the Constitution, Mr. Gibbons?

    He also make the following nonsensical argument: "Refuting the article requires evidence that the banking system would not have collapsed without the bailout, or that America would be fine with the collapse of its financial system." This argument is idiotic because you requires his naysayers to come forth with unfalsifiable arguments.

    What is undoubtedly true, though, is that the bailiut was sold as a plan to buy up toxic assets; no toxic assets were bought; the bailout money instead has been stuffed onto banks' balance sheets. (Just what we need, more fiat money, and fractional reserve banking!).

    What is also true is that about $37 billion of the bailout AIG money went directly to Goldman Sachs, Paulson's old firm. Talk about government being the ultimate racket!

    In sum, Gibbons is a tool.

  • Report this Comment On February 20, 2009, at 6:18 PM, jazzwriter wrote:

    The point is sooooooooooo being missed in all of this. The bottom line is that our troubles began with the misconception that strong industry drives a nation. The everyday spending of the masses is what grew and maintained the national economy. Demand for products drove industry. When greedy lenders handed out toxic loans to everybody and their great grandma in 2002 & 2003, it was a led balloon that eventually had to crash. As it did and the masses stopped spending, government reached out to help the businesses we stopped spending on. That was the first mistake. It didn't help the economy and the businesses pocketed the money. As things kept falling, our government kept repeating the same mistake, business kept dividing the money, the economy kept falling and it still is. All they had to do from the beginning was hand out REAL stimulus checks: 20k to 50k per taxpayer, enough to take our worries down a few notches and we would have started spending again though some businesses would have been left out in the cold because their products are not what we want anymore. No matter how much money you give businesses, if there's no product demand, their wheels can't turn so they just keep laying people off and pocketing the money. Conspiracy theorists claim that the only way to push through the new union and get the "Amero" dollar created, much like the Euro, is to break all of us first then offer the Western Union as our rescue. It might be true because as many times as they mention "The Taxpayer's Money" someone must have figured out that rather than hand it to every crook on the planet, give it to us. We're the ones laid off, losing our houses, losing our saving and laying awake nights with worries. Give us enough and we'll spend it. The economy will start turning again when we can spend again. They're starving us out besieging the people. It turns out that despite his promise, Obama has the same boss as Bush did; "The Federal Reserve"


  • Report this Comment On February 20, 2009, at 6:21 PM, easymoney4us wrote:

    After watching all the Bailouts and Pending Bailouts, Government Pork, Local State an National in this so called stimulis we are just digging a larger hole that will take decades to get out of.

    Just another note for all you Liberals....

    Before the election Obama was for pulling troops out of the Iraq region. Now he wants to send an additional 1700.

    I am self employed here in Wisconsin cannot even get an unemployment check if my business goes under yet we can spend billions on so called "Infrustructre" for roads government "Earth Friendly" cars and Government buildings........Where is this going to help me ....the average joe?????

    I am not alone, watch the markets.

    I hate to say it but we are in for a very rough ride.

    The strongest that get through this will survive, if not we are in for a socialist country.

    Wayne from Wisconsin

  • Report this Comment On February 20, 2009, at 6:28 PM, DAFFDILL78 wrote:

    I wrote my approval of the initial bailout, then heard Lou Dobbs suggest it might have been cheaper to buy all outstanding mortgages. That would have made all the derivatives good, preventing the bank failures (& AIG). Instead, is the tail wagging the dog?

    I prospered buying the financials and selling on the news when the first bailout passed congress. Can I do it again with Obama's bill?

    If we had let the banks & AIG fail, set up a competing banking system with more regulation, letting greed take its licks, the action would have had world-wide consequences. Those who invested in the system would have suffered. Trillions world-wide would have evaporated. Other governments would have followed suit. We would have started over with new rules, new players. I suspect the recesion would have lasted 1-2 years. The next generation would have been more conservative with their investments.

  • Report this Comment On February 20, 2009, at 6:32 PM, dtbrown33 wrote:

    As usual the "Fool" has it's head firmly inserted in the narrow confines of the "Financial Arena" and is therefore blind to any other area of National concern

    The major thrust of the Economic stimulus package (according to Obama on several occasions) was to create jobs.

    In this respect the package was an abject failure.

    If the President and Congress really wanted to create a MINIMUM of 3 Million new jobs they would apply the laws that are now on the books and deport 4 or 5 million ILLEGAL aliens.

    It has worked well in Arizona!

  • Report this Comment On February 20, 2009, at 6:33 PM, afleetfeet wrote:

    easymoney4us -- you are wrong. Before the election BO consistently said he wanted to take troops out of Iraq and put them in Afghanistan where the real terrorists are. Get your facts straight.

    <<I am self employed here in Wisconsin cannot even get an unemployment check if my business goes under...>

    Don't whine, that's the choice YOU made.

  • Report this Comment On February 20, 2009, at 6:41 PM, easymoney4us wrote:

    afleetfeet I understand what you are saying but you need to look back pre-election. I have my facts straight.

    And yes I am sorry for trying to live the american dream...

    Any Government Job openings?????

    Last I heard small business was the backbone of this country....well the back may be broken.

  • Report this Comment On February 20, 2009, at 6:43 PM, Wanderer13 wrote:

    "Let me say clearly to those of you who say all regulation is bad: you're idiots and it's time people say so without mincing words." ......

    Government cannot regulate without picking winners and losers in all instances. If you say all copper miners (Freeport-McMoran) must clean up / prevent cyanide contamination (let's just say they don't care that they would be poisoning their own customers, employees, and stockholders) and don't include gold miners, silver miners, and so forth, you have created a protected / privileged class of business. If you don't simultaneously allow for overseas miners not being mandated to avoid cyanide leachout in their operations, you have now created a trade disadvantage by regulation. If you do allow for such a difference, (tariff, buy American) you will probably create a trade war. ALL GOVERNMENT REGULATION CREATES DISTORTIONS IN THE FREE MARKETS. Those miners who poison their customers and employees will go out of business, in the short or long run. Having government get involved simply multiplies the problems by ten times the number of regulations issued.

    Yes, this is tough; yes, caveat emptor is a bitch. Having the unquestioned rule of government (NOT necessarily the rule of law, often another thing entirely) is insane, and leads to gulags, massacres and poverty / slavery similar to Soviet practice. I do not wish to endorse your unquestioning acceptance of regulations; remember the Revolution was started partly by the Stamp Act, the tea tax, and other government atrocities perpetuated on a free people. We are overdue for another; as Jefferson stated, "The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants." Funny how that quote is rarely taught in school anymore.

  • Report this Comment On February 20, 2009, at 6:49 PM, pauldelang wrote:

    I've read the article and the comments and frankly, nothing makes sense to me. I don't understand how you can fight an excessive debt problem with more excessive debt or how you can shift any debt burden from the financial institutions to the taxpayer and expect to pay for it with tax cuts. My reason tells me that if you assume debt you should increase your ability to pay the interest on that debt. Esspecially if the taxpayer and over indebted consumer is one and the same person. It can only lead to an even bigger collapse later.

  • Report this Comment On February 20, 2009, at 6:50 PM, GvonBehren wrote:

    Congratulations on your second week of lively debate. I re-read your original treatise and found it sorely wanting. Your follow-up is just as myoptic in my humble opinion as well. Perhaps your economics training came from an online university; not a school of wisdom.

    Wit respect to the bailout, it would have been simpler to let poor banks fair and use a good portion of the $700 billion to refinance existing mortgages at the Fed rate. At least it would be a loan not a loss.

    Another portion ($150 billion) should be used as a revolving line of credit for the Proctor & Gamble/Wal-Mart style of free enterprise. The money given back to the banks could be used by them to soften their cash flow problem or to go out of business.

    I am looking forward to your next article on the efficiency of spending in the Porkulous Economic Recovery Act -- it too will be something that will cause great debate. I hope you are learning from all this wisdom given you in a short period of time.

    NOTICE: This content is intended as constructive criticism based on economic principles learned from the University of Chicago Graduate School of Business. Any humor attempt not appreciated by any reader may be freely ignored by that Fool

  • Report this Comment On February 20, 2009, at 6:55 PM, kws45 wrote:

    The dirty little secret that no one wants to admit or publish - Our new Pres and the Dem congress really do not want the economy to recover any time soon. Gives them more reasons to manipulate this great country towards a government controlled state where their power will be expanded exponetially. Hang onto your hat folks, this one is going to be a fun ride!

  • Report this Comment On February 20, 2009, at 7:13 PM, HopeWeCan wrote:

    I can't read all these comments, but I think I get the gist. And I think that we should all consider the possibility that the following is true: After 8 years of government by "W" and friends, President Obama is faced by what may be the greatest financial catastrophe in American history. It is not his goal to lead the nation down the road to hell. Obama's advisors are the people with the greatest intelligence, the highest academic credentials, and the most experience in relevant fields that are available. And the top-level people ARE available to him because making the right decisions at this point really matters and these people really care! Unlike Rush Limbaugh, the really credible experts do not want President Obama to fail - because the results of such a failure would be truly horrible. So the "bailout" program being implemented is the best plan that can be devised by the best team Obama could assemble, who are working with the best experts who could be consulted. Given the seriousness of our national circumstances, perhaps we should support our President - give him the benefit of the doubt, some time to prove himself and his programs, and hope for the best.

  • Report this Comment On February 20, 2009, at 7:17 PM, gfisher3 wrote:

    This crisis began twenty years ago with the collapse of the S & L industry, because S&Ls dominated 80% of the home mortgage market. Securitized debt took over that abandoned market, using foreign investors instead of local deposits as a source of funds. SDOs have worked brilliantly with almost every other kind of debt, but mortgages became unsound but popular because tax deductions were repealed for other kinds of loans except mortgages. The lending officer couldn't know whether the loan was for a house, or to pay for a wedding. When some of the excesses became apparent, particularly when they were vilified, CDO sales abruptly went to zero; 80% of the home mortgage market vanished. We don't need any new houses, but twenty years of CDOs are frozen, along with the whole banking system -- because there's no market to price them.

    Although it's presently more urgent to put out fires, I'd like to see evidence the administration understands what it is doing, and is making plans to fix underlying problems. I'd like to see some sign they realize they must eventually reverse this inflation stimulus. Unless you have Juan Peron in mind, populism can't possibly address this crisis. If we persist in this cram-down nonsense, we can look forward to another Supreme Court-packing confrontation that is entirely avoidable. By the way, we are going to need an international currency, because small countries like Iceland, Switzerland, and maybe England, have banks which are bigger than their governments, so there can be no government bailout. We must not let impending foreign collapses drag us down.

    You can't do it all at once, but at least the President could be supplied with words to suggest his advisors understand the issues, The handling of this crisis is unspeakably amateur, and what's worse, it looks amateur..

  • Report this Comment On February 20, 2009, at 7:19 PM, Saratovets wrote:

    I echo the idea that has been proposed in these responses several times already. Let’s forget all the D vs. R politics for a minute and look at facts and logic. Let’s start by giving the sides of the argument their proper names. Those in favor of the article, the bailouts, and the Obama/Pelosi/Reid spending plan espouse Marxists ideals. Rather than trying to distinguish which branch of Marxism they identify most closely with, let’s just call them Socialists. And, let’s call those on the other side of the argument capitalists.

    Now then, I read some great responses from the capitalists referencing Austrian economics, cause and effect analysis, the track record of socialist policies in other countries and in our country at other times, and various articles and websites. The Socialists cite as evidence only their interpretation of public opinion and… well, I guess that’s about it other than the idea that the capitalist responders are a bunch of idiots and global warming deniers. Is there a socialist here who would like to try to persuade me that direction with logic and evidence? I will proudly admit that I think Capitalism is great. Capitalism and the US constitution have changed the world. It was the major driver of the truly unrivaled success that the US has had over the last 200 years. What other political/economic environment could have enabled a county with around 5% of the world’s population to be responsible for the vast majority of the world’s inventions, medicine, technology, wealth creation, charitable contributions, defense of freedom, and global increase in standard of living over the past century or so? On the other hand, there is no example of any successful socialist regime in the history of the world in any country. What evidence do the socialists propose as an argument that socialism will be good for America now?

  • Report this Comment On February 20, 2009, at 7:21 PM, longthrow wrote:

    We are headed for financial ruin with the current administration. Too much, too fast without public input or debate. In 18 months our country will no longer be reconizable. Please folks, stop living in denial.

  • Report this Comment On February 20, 2009, at 7:27 PM, heartoninc wrote:




  • Report this Comment On February 20, 2009, at 7:32 PM, sylvanpc wrote:

    My first inclination when reading Mr. Gibbons original article was to unsubscribe from this nonsense. But then I looked at your logo. To educate, amuse, and enrich. Educate and enrich, not a chance. To amuse most definitely. All of my money in cash for the past 2 years and won't vote for the demopublicans only 3rd party!

  • Report this Comment On February 20, 2009, at 7:34 PM, mediapro wrote:

    I've seen enough revisionist history on the causes, the good and bad economic philosophies at play during this period of the past thirty years, and the success/failure of the New Deal in these comments to make me vomit.

    Since I feel that it's important to understand causes that don't need to be repeated and a history lesson for all the true believers in supply side hypotheses, a brief reminder:

    Flash back to the neo-con's answer to 1970's stagflation and Milton Friedman's Shock Economics Theory he plied so well in South America for right wing fascists.

    Roll tape a bit forward to the Gipper. Cut taxes, spend on defense out the wazoo, run record deficits, de-regulate markets and watch Uncle Milties' magic work.

    While every right wing neo-con tape loop is buzzing with out-of-control GSEs, we all seem to conveniently ignore how all of this silly and frightening theoretical economic approach played out around the world through the likes of the IMF, World Bank, Halliburton, and their ilk.

    Look at any country where this supply-side, trickle down, deregulated gambit has played and look at how eeiry is the similarity between those countries and this one:

    1. The top 1% control 40% of all financial wealth in the U.S. The top 20% another 52%, leaving the rest of us (80%) America's financial wealth at a whopping 8%.

    2. In terms of inherited wealth only 1.6% inherit more than $100,000. 91.9% receive nothing. Yet the "death tax" was/is the highest priority on the ultra-conservative agenda.

    Now for some sobering reminders:

    Under Clinton we enjoyed a $287 Billion SURPLUS that's now an ever-growing DEFICIT that at last peek was nearing $1.4 Trillion and national debt that has grown from $5.7 Trillion to $10.2 Trillion in just seven years.

    It wasn't because Clinton was an economic genious. He simply returned out-of-control revenue reduction (tax cuts) back to the Reagan rates and chose folks who shared his philosophy of government and its role. I'll put my money in the hands of the guys that believe that it's the government's job to invest in the 80% of us that need practical ways to grow our own wealth (smart energy policy, infrastructure development, education).

  • Report this Comment On February 20, 2009, at 7:51 PM, easymoney4us wrote:

    Media pro talk to me in six-twelve months. I hope you are correct but I am very, very, sceptical.

    (and quite frank not ready to put my head in the sand just yet)

    It sounds like you have................

    We cannot spend our way out of this.

    The more we spend foulishly like a drunken sailor the further down we go.

  • Report this Comment On February 20, 2009, at 7:57 PM, waxparts wrote:

    A run of $550 billion in 2 hours seems excessive and to be honest calculated. It's never to my knowledge happened in the past so who made the decision knowing it would be the straw that broke the camels back?

  • Report this Comment On February 20, 2009, at 8:05 PM, NoOracleHere wrote:

    I would urge Foolish folk to respond less from fear and ideology and more from pragmatism and thoughtfulness. The people we elected did not find quite the solution that I would have implemented had I been the decision maker. No surprise there. I would have urged them not to give more money to the banks. I think the bailout is flawed in that respect. But I also think there is no perfect solution. Whatever solution is tried, it will have critics. Some will be very vocal. The New Deal had critics. In fact most history I read says the New Deal didn't go far enough, partly because of those critics. My own interpretation is that where the New Deal failed, the War succeeded. Why? The war put EVERYONE to work. The New Deal did not. The war created HUGE deficits, and to soak up the dollars being printed, the people bought war bonds. This was a sacrifice on the part of many and they were willing to do it. (Today, we don't want to make sacrifices. We'd rather complain.) As much as folks poured their savings into war bonds, we still had inflation. People knew better than to complain about that. We had to beat the enemy. With all of that stimulation, the wheels of capitalism had practically no choice but to turn again.

    But it would be a mistake to say that only the War could have pulled us out of the Great Depression. I cannot accept that Capitalism is dependent upon war to succeed.

    I believe we are endowed with two economies: one is speculative, and the other productive/consumptive. The speculative economy is the one we Fools love to play in - it is based on the principle of compounded returns. But few realize there is a fallacy of composition in this. You'll remember the fallacy of composition as the football game paradox. If you stand up at a football game, you can see the game better. But if everyone stands up at the football game, nobody sees better.

    Not everyone can make compounded returns. If the economy is a closed system, then somebody has to pay those compounded returns. That job usually falls to the productive/consumptive economy. This economy is based on a day's wage for a day's work. It is the economy that gets starved for cash when the speculative economy overheats.

    Someone tell me I'm wrong!

    I am hopeful that we can find ways to stimulate the productive/consumptive economy without overheating the speculative economy. I think this is the legitimate function of sound bank regulation. I think our overemphasis the last few decades on Keynesian economics, and stimulus thinking has been a big part of our problem because it has overheated the speculative without providing nourishment for the productive/consumptive. As a result, we have lost our manufacturing base, our balance of trade has suffered, and Americans all want to grow up to be stock brokers.

    No doubt the next few years will be sobering. Survival will be a primary concern as it was during the war years. We need to work together and think pragmatically. Not everything is going to work. But something will. It may take a few tries to get it right, but working together we will find our way.

  • Report this Comment On February 20, 2009, at 8:12 PM, XTMFCaptain wrote:

    First off to TMF Diogenes - you ask for someone to show proof that the bailout didn't improve the banking panic. Well, that is impossible since we can't recreate history. We can discuss theory, but solid, empirical evidence is impossible because the government followed a different pass. I would like to see proof that the TARP was the cause for the recent improvement in the credit markets. You can't prove that either. It is conjecture either way. Of course, when we finally pull through this depression in a few years, and we will eventually do so, the government will claim it was due to their actions. However, they can't prove that cause we will never see what would have happened without this senseless spending. This is why the silly proposition that FDR got us out of the Great Depression gained traction. FDR prolonged the Depression, yet the current administration wants to replicate his policies.

    whereaminow stated a compelling case in the first or second comment. He or she is right on the money. This is nothing more than the natural over-leverage that happens when you let a banking cartel control the money supply. They increase the supply to the point where malinvestment is disguised as genuine growth. Then when debt levels exceed a healthy rate the market decides its time to devalue, and we get this kind of crisis. It will happen in 50 years again if we don't address the problem of the Fed.

  • Report this Comment On February 20, 2009, at 8:22 PM, easymoney4us wrote:

    NoOracleHere>>>>> well said I totally agree with you we just need to control stupid spending.

    For every Action there is a Reaction.

  • Report this Comment On February 20, 2009, at 8:26 PM, easymoney4us wrote:

    XTMF you are also correct.

  • Report this Comment On February 20, 2009, at 8:30 PM, Wanderer13 wrote:

    Dear NoOracleHere:

    "In fact most history I read says the New Deal didn't go far enough, partly because of those critics."

    The texts you are reading, like most these days, has crossed over from history into opinion. A straightforward history text would cite statistics: at the beginning of the Depression (say, 1929) the government recorded X-thousands unemployed; halfway through (say, 1934), the government recorded Y-thousand unemployed; at the start of WWII (1941) there were Z-thousand unemployed; and at the end of WWII (say, 1944-1945) there were essentially NO unemployed, the dead and the military having put everyone either to work or in graves.

    Speculation on whether the New Deal went insufficiently far, too far or just right is just that, SPECULATION.

    "Not everyone can make compounded returns. If the economy is a closed system, then somebody has to pay those compounded returns. That job usually falls to the productive/consumptive economy. This economy is based on a day's wage for a day's work. It is the economy that gets starved for cash when the speculative economy overheats."

    Why couldn't everyone make compounded returns? It does require examination, due diligence and effort, and not everyone is willing to do that work (see Madoff, Bernie). But there is nothing I can find that forbids compounding; certain RATES of compounding are ridiculous at present capacities (and here's where Bernie's investors went wrong; they were both lazy and greedy). I can't see where compounding at 2% is unsupportable in a modern economy; I can see where 25% is. 2% could be supported by expanding population, increasing efficiency and scientific / technological innovation; 25% is magic, supportable only by fraud (at current levels of technology).

    "Someone tell me I'm wrong!"

    I wouldn't say wrong; possibly a little simplistic, but who am I to say?

    " Not everything is going to work. But something will. It may take a few tries to get it right, but working together we will find our way."

    I am pleased that you are optimistic. Do you define "working together" as the process that resulted in the current stimulus bill?

    Yours for a free market system in America!

  • Report this Comment On February 20, 2009, at 8:31 PM, unfknblvble wrote:

    The great canadian poet,Leonard Cohen said it best in1988: 'You can say that I've grown bitter,but of this you may be sure.The rich have got their channels in the bedrooms of the poor,and there's a mighty judgement coming,but I may be wrong.I hear these funny voices,in the tower of song."

  • Report this Comment On February 20, 2009, at 8:32 PM, Wanderer13 wrote:

    Damn, "has" should be "have" in that sentence about "texts". Spell-check doesn't do a thing about grammar!

  • Report this Comment On February 20, 2009, at 8:33 PM, Saratovets wrote:

    Mediapro, I doubt your figures. If they are correct then it is because the 80% are too busy spending too much on junk that doesn't count in the wealth category.

    But, even if the numbers are correct, what is your point? Who cares if someone has more than me? I'm glad there are examples of what I can acheive. Are you suggesting that the rich got rich at our expense? I work for the only billionaire in the state. He started with nothing and built this company to employ 30,000 people who are all very happy to have a job here. I think my boss deserves every penny (actually shares of the company) he has. He earned it fair and square. And that brings up a good point. Most of the wealth you are talking about is stock in the comopanies that these rich people built and which employ or otherwise benefit us 80% types. In contrast, the congressional budget office has determined that the spending bill WILL have a net negative affect on us 80%. If you are worried about capitalist taking your money, consider legalized theft by the government .

    The effect of limiting a persons ability to gain wealth does nothing but decrease production, which means there is less for all of us.

    The great thing about America is (was) that anyone, can achieve whatever they are willing to work hard enough for. I'd much rather be trying to make it in the US than in any socialist country.

    By the way, how does the average American's wealth stack up to the the world's wealth? I'll bet most Americans fit in one of those top 20% groups when compared to the rest of the world. The spending bill will change that a little, but it won't be because the rest of the world is getting richer.

  • Report this Comment On February 20, 2009, at 8:38 PM, whypher wrote:

    B Frank was only part of the problem. Phil Gram was the other part. The year 1999 seems to be the water shed year for this mess. Between Barney Frank(D) and Phil Gram(R) this is a bipartisn problem. As much as the left and right want to blame one another its both parties and the vast majority that thought they could get rich quickly through realestate. Barney Frank has been talked about a lot on this board so I'll focus on Phil Gram. Ya, that's the same guy who was involved with Enron, but thats for another blog. Then he authored the bill that repealed the Glass-Steagall act. There is plenty of blame to go around. With that said how do we get it fixed?

  • Report this Comment On February 20, 2009, at 8:46 PM, DowntheBottom wrote:

    whereaminow has just about got it as far as I'm concerned. While alot of people here talk about "megatrend opportunities' and 'the next boom' in stocks', everyone is missing the point. For good economic (and NOT Investment) reasons, it is fairly clear that America's economic lead will end up way down the ladder soon, because of:

    1. China has recently spotted that the more Treasuries she accumulates, the less these Treasuries will be worth on maturation, thanks to Bernanke trying not-so-discreetly to 'inflate away' the Debts of America(and making the dollar valueless). So China will be reducing her rate of purchase of Treasuries to pre-Bailout levels - and will further tail off purchases of the ill-paying US Treasuries in preference to buying gold. The US Treasury bubble will therefore burst, the dollar trashes, and US govt bankruptcy is very likely to ensue.

    2. China has introduced a currency experiment in Asia - with a view to switching from the dollar to yuan as the reserve currency of Asia. The Middle East may do the same thing with a gold-backed Dinar. What chance the dollar then?

    3. And I haven't even mentioned the US markets!!

    Anyone who thinks that there is a new "MegaTrend opportunity' out there - good luck to you.

    Personally - I came out of all my American dollar denominated stocks in Oct 2007. I came out with a good profit, and nothing will get me to re-invest at the moment.

  • Report this Comment On February 20, 2009, at 9:12 PM, easymoney4us wrote:

    C'mon DowntheBottom (Choke...Choke...)

    Maybe you should take over the treasury and get us out of this mess.

    Did you pay your taxes?

  • Report this Comment On February 20, 2009, at 9:15 PM, fishandhunt wrote:

    All those crooked bankers from Wall St. to the hinterlands should be shuffled off to the "Big House" to experience some reality in the care of those murderers, rapists, molesters and druggies. When their horizons and sphincters have been expanded, then maybe their successors will conduct business in a moral and legitimate manner.

  • Report this Comment On February 20, 2009, at 9:18 PM, markbures wrote:

    "Few would argue that when Freeport-McMoRan (NYSE: FCX) builds a gold mine, it should be allowed to let cyanide leach into the drinking water of nearby towns. There's nothing inherent in capitalism that prevents that sort of behavior. It's a blind spot that we correct through regulation."

    This is completely false. Why do you think that anyone with property next to a gold mine would allow cyanide to leach on to their property? Would you? Of course not. The regulation that you speak so highly of, in fact, ALLOWS:

    * Pollution of an 'acceptable' level onto neighboring private property (whether it's acceptable to you or not)

    * Pollution of an 'acceptable' level onto property owned by no one (i.e. public property) which you can do nothing about

    Pollution would be REDUCED in a world where there was no public property and no government because private property owners have better incentives to protect their property than the bureaucrats do. This has already been demonstrated in the case of protecting animal life. The most prosperous species are those that we are allowed to own (livestock and pets). Those that are in danger are those 'protected' by the government.

  • Report this Comment On February 20, 2009, at 9:21 PM, sailor50 wrote:

    For those of you who want to condemn the Stimulus Plan before it has actually begun, I read you as saying you "hope it fails". Ah, good Republicans all. John Boehner of Ohio is your leader, I reckon. Half of the existing federal deficit was caused by Bush's tax presents to our highest paid citizens. The rest of the citizens got dirt kicked in their faces...and their sons and fathers slain in Iraq. This is truly economic class warfare.

    I am an investor and a former Republican at a time when the party stood for something good and positive.

  • Report this Comment On February 20, 2009, at 9:25 PM, Zoltar22 wrote:

    the last 8 years and the de regulation of the banking industry has a lot to do with this mess. Spending one billion plus a month in Iraq is part of it, with all the overseas spending and pet projects of the congress is a big part of the mess and the value of the dollar. We have had artificial inflation of the dollar for the last 8 years. The steep count of foreclosures need to stop and I have not heard any ideas from anyone else. The only thing people need first is a JOB to pay the mortgage and then restructure the loan. The banks need to either give the money back or Stop paying the huge bonuses like yesterday. Banks should not have been bailed out and you see why, they are only for themselves. The bail out should have been used to keep people working and not to lay more off and save the funds. Nothing has changed with the banks.

    Buy American ...

  • Report this Comment On February 20, 2009, at 9:27 PM, easymoney4us wrote:

    Sailor I was on your boat now I am a former investor and am now a Proud Republican

  • Report this Comment On February 20, 2009, at 9:31 PM, Savannahguy wrote:

    The last refuge for a socialist/democrat/marxist:

    "The Republicans started it." Amazing logic. When the economy, the country and the Republic is gasping for air, it's just "King George" started it. When the house is burning down, blame the kitchen.

    Right... sort of. Dubya was in the witless pack of RINO's that started and allowed it (socialism) to continue happening. Clinton, then Pelosi, Reid, Frank, Dodd, Schumer, on and on down to Raines, Greenspan and Paulson were the engineers of mass economic destruction. Gives WMD's a new twist... MED's. That's it. MEDS. What our government needs. What we will need but stand in lines to get by the end of the year. Celente trends anyone?

  • Report this Comment On February 20, 2009, at 9:45 PM, Savannahguy wrote:


    You have to invest. Just beware of equities. One word: gold. Go there. And silver. Watch PAAS. Silver will be gone in 20 years at the rate China is buying it. When the dollar is worthless, it'll be the standard that holds and raises value. That is, unless Obama follows through on FDR's policies, such as making gold bullion ownership illegal. Then, the revolution would truly begin.

    I like CEF, GDX, ABX, NEM, RDLD, and GG is about to run away. So are many other gold and silver stocks and funds. Despite the massive currency manipulation and paper shorts, the Fed and the World Banks have shot their wads and are about to pay the piper. Very little leverage left in them. Gold will go to 1200 very soon. Mark it. Watch or ride it up.

  • Report this Comment On February 20, 2009, at 9:48 PM, lcpowell wrote:

    Thanks to all the Republican obstructionists (and their enabling Blue Dog Democrap lackies) for sticking diehard to their rigid greed-first ideology, which has produced such unprecedented political and financial disasters in the last eight years. It's become increasingly predictable that any time the government makes a move to ease the pain of anyone other than Wall Street parasites, the short-sighted herd will proactively tank the stock market in a self-fulfilling stampede. Every time you do this it pumps the value of my gold stash, which in case you haven't noticed, has risen by about $100/oz in the last 30 days. Keep on fuming, boys, we're just launched this year's moonshot and we need all the the hot air you can bellow into the bonfire.

  • Report this Comment On February 20, 2009, at 10:08 PM, larrylitch wrote:

    What strikes me most vividly about a lot of the comments above is how poorly many people write English nowadays. And the sloppiness seems to increase in direct proportion to the indignation felt.

    We should calm down. It's only money!

  • Report this Comment On February 20, 2009, at 10:16 PM, ugottabekidding wrote:

    Well put ICpowell. What the Republicans did was use their Deregulation movement to benefit themselves, the big banks, big pharma, and big corporations in general.

    Teddy Roosevelt said 100 years ago that "Capitalism without some regulation turns into Greed and Corruption". And that is exactly what the pompous ones have created. They have ruined just about capitalism. So now let them complain about a little socialism till they're blue in the face. After all they brought it on.

  • Report this Comment On February 20, 2009, at 10:24 PM, Dankmasta wrote:

    I have been following things for awhile and here is how I see it. The conservative republicans really have no idea how to fix the economy. All they could come up with is a tax cut which showed just how prehistoric the republican party is (besides the senior citizen convention they had for Palin during the election). Tax cuts is part of the reason we are in this mess an even if you were to put more money in the pockets of regular people ($100 bucks a month is what I estimate) the states will take that money away with a tax increase for lost revenue (it's already happen in California).

    It's funny to hear people talk bad about the stimulus package and the democrats. nobody was complaining about the trillion YES trillion dollars borrowed for the pointless war in Iraq. Nobody complained when home prices were going through the roof and people were using equity lines of credit to live out the miami vice fantasies. the point this that we are all in a bad situation and it will require an enormous sacrifice to get things going again. we are in a hugh correction period.

    Wall street is even more funny. Who ever was connected to CDO's should be prosecuted for fraud. these securities were knowingly rated incorrectly for profit and moody's knows that.

    the banks need to be nationalized for their non-willingness to take the losses on choices they make in the first place. lending out 30-to-1 is insane. it was the banks that made the choice to do no doc loans and loosen standards for getting a loan and creating negetive-am loan products. now the banks are unwilling to see the assets at street value and expect us the tax payer to keep giving them money. Citi bank gave the us (the government) 7 billion in worthless stock for insurance assest bad assets and so far citi bank has collect 250 billion dollars. We need to nationalize the banks NOW!!!

    so where did this problem come from? DEREGULATION!!!!!

    We now have proof that the people of this country cannot manage themselves properly. if we could we would be very wealthy and not having this conversation. what we are going through is nothing new and the actions taken are near the same. we are just spending a lot more money and the entire world is in the same boat with us. capitalism is monster that needs to be on a leash for it will eat itself if you let it.

    free credit was the catalyst in both situations an when it comes finances people are just plain stupid. if we were smart we would all be wealth and not having this conversation. you had stupid people buying investment products they knew nothing about. you had stupid people offering bad mortgage products. Stupid people signing up and selling mortgage products they knew nothing about. A stupid government that cannot stand together to resolve the problems we face because of childish bickering. our credit system was flawed right down to FICO that was being manipulated to facilitate no doc loans (liar loans). when the govenment let lemans fail the cast was set for the downward spiral and not our government has commited over a trillion dollars to the commerial paper market, money that is borrowed from the sale of government bonds.

    I think the pres. is doing a great job considering the problems we face. and we have to do something instead of nothing. people need to know we are not the only ones in trouble. other countries are print money just like we are. other countries are dropping interest rates just like we are. we as a people need to re-think the way we live and know that the banks are not your friend. they just want your money and should not be trusted. with that said people should not use credit and pay cash for things they want. it was like that in the past and should be like that again. companies need to increase wages to support a healthy living enviroment and would be forced to do so if people stop using credit. Credit is the problem and it aids business to keep wages down because you the work is borrowing 10 dollars for ever 1 dollar you make and possibly more (include the interest you pay on your home with all your other debt obligations). we need to save our money and PAY WITH CASH.

    we need to reset the mortgage game or it will take 25 years to break even on your house and remember the banks really don't want to give you the consumer money for a home because they are trying to save their own skin right now.

  • Report this Comment On February 20, 2009, at 10:31 PM, fightingart wrote:

    Still foolish.

    You said, "The main problem with this argument is that it's entirely ideological. It fails to address the issue at hand and provides no evidence". Anyone with any sense at all can see, and knows that you can't spend your way out of debt. This is evident in the financial affairs of each individual, every business and applies to government as well.

    When we are ready to return to reality from never never land and discontinue the failing Bush/Obama policy of bailing out and rewarding all the greedy, irresponsible and foolish while punishing the smart, enterprising and industrious, then the market will be allowed to make its business cycle adjustments without the government causing and prolonging these painful episodes.

  • Report this Comment On February 20, 2009, at 10:39 PM, mckinneyfool wrote:

    One thing I think everyone forgets when discussing the stock market, is that it is basically legalized gambling, with a few rather ineffective regulations thrown on top. At least the Vegas casinos can enforce some regulation with bouncers and a back-alley beating.

    Unfortunately for the rest of us, we can't seem to do that to the Big Banking Bunch, who basically stole $350 billion from us. At least this iteration of the bailout is going to have some strings attached, as needed.

    To those of you who spew the Republican vitriolic party line: just wait. Your time will come, when you lose YOUR jobs to the greed of your leaders; and when you watch them sail off into the sunset to non-extradition countries with your money and without you, you'll be singing the same song the rest of us are, while wallowing in the mud with the rest of us--or, if you're lucky, from the cardboard box beneath the underpass.

    Those who lead us, both in politics and in business, have a responsibility to those who support them and enable their positions, just as those who work for them have a responsibility to give them good work in return. Otherwise, the "leaders" are just thieves, stealing from their customers and employees.

  • Report this Comment On February 20, 2009, at 11:17 PM, cYoDa wrote:

    The problem here is not with capitalism. "Pure Capitalism" will never work without the temperance of morality (which it appears Wall Street has lost). If you want to see pure corruption keep giving the government more and more authority. "ABSOLUTE POWER CORRUPTS ABSOLUTELY".

  • Report this Comment On February 20, 2009, at 11:26 PM, dign4gold wrote:

    You social lemmings are ALL FOOLS- Big Brother is stretching his arms out (and his last name starts with a capital O) willing to help anyone in trouble- who cares if the rich get poor- they deserve it- right? Let's nationalize health care, nationalize banks, tax you on how many miles you drive (that one could be good- maybe actually lower obesity rates in this country- oh yeah THAT"S WHY they want to do it...go green), digitize TV to "free up" analog airwaves (maybe for the wave of new analog technology coming soon). No, let's just let a bunch of lawyers, who have no economic background, not read one of the most important 1100 page bills, and not consult the 1000's of brilliant economic minds in this country before they sign it, because they will be late for vacation- oh, sorry, that's been done (kudos to the ONE democratic senator from Oregon who has a brain and voted "NO"). Hey you fools, take your eyes off the TV and what the media is making you believe, and look down the road- we are heading for civil war...Know how to grow food? Shoot a gun (for those of you who still have that right)? Have any physical gold (or better yet silver) stocked up? Could you survive more than 3 days without any GOVERNMENT INTERVENTION? Didn't think so. And you were so happy to "VOTE FOR CHANGE". I vote for David in Qatar- you're closer than you know. This democracy is heading for civil unrest, and the ONLY way to stop it is to GET THE GOVERNMENT OUT! OOPS- looks like we have to wait another 4 years...Too late...gotta go, the men in black jumpsuits intercepted this e-mail, and are breaking down the door to come and get me...

  • Report this Comment On February 20, 2009, at 11:42 PM, cYoDa wrote:

    Dankmasta wrote "We now have proof that the people of this country cannot manage themselves properly" He went on to say that it was deregulation that started this.

    I agree with him on the last point but it wasn't a single party or a single person (George Bush seems to be the blame game name). Deregulation started in the 90's (99 for the deregulation of default swaps). George Bush certainly didn't help the situation but neither did the party opposites. you really think that since the people of this country can no longer govern themselves Washington will do a better job. If there is anything that Washington does well it's the ability to operate inefficiently and uneffictively.

    You also supposed the lie that we "have to do something". It's time we as a nation faced the truth that we can't borrow our way out of this debt stranglehold. The economy must drink it's medicine. Now I'm not entirely opposed to the propping of the financial sector that is occuring right now.

    My worry is this. Our government is currently operating according to Keynesian economics. Those principles are part of what led us to where we are and they certainly won't help us get out.

    Keynes basically advocated that the people of a nation shouldn't save because it ties up capital. His arguments are based upon a flawed concept of economics that operates according to pure mathematics and forgets to factor in the Human Factor.

    I won't argue that credit is a powerful tool and when used correctly can aid. But it will ultimately damage an economy that is built upon it. Keynes didn't factor in the fact that humans would ultimately abuse a free flowing credit system. If used properly it would work.....but we are all human. If we are to ever return to greatness economically it will require an examination of our fundamental philosophies about money. I argue that ultimately the man who builds his life upon a principle, not of credit, but on a cash basis, will ultimately operate far more efficiently than the idiot who believes the lie of credit. Show me numbers all you want, I understand human nature.

    Just remember this. Our dear government is entirely inefficient; Bush didn't change this (he worsened it), and I don't think Obama will either. And he won't because his economic policies are flawed. THE DEATH TOLL FOR KEYNESIAN ECONOMIC POLICIES IS TOLLING. LONG LIVE CAPITALISM, A SYSTEM THAT MUST BE TEMPERED BY THE MORALITY OF THE PEOPLE THAT EMPLOY IT'S PRINCIPLES. FREEDOM HAS ALWAYS CARRIED WITH IT THE MANTLE OF PERSONAL RESPONSIBILITY.

  • Report this Comment On February 20, 2009, at 11:51 PM, shellouise1 wrote:

    There really is only one solution. We just have to be really tough on all the folks who have lost their homes or jobs. I see nothing wrong with motivating these people with homelessness and hunger. Eventually, they will understand that survival means groveling and gratitude for simple rental shelter and a meal a day.

    Clearly, we must abolish child labor laws. This simple act alone will lower labor costs and by doing so provide small, big and global business with the a labor force it can afford for simple low skill jobs. The children of the homeless or laid-off could be utlized, taking the pressure of supporting them off their parents. Companies with facilities in China, Mexico, Jordan, etc, can then be staffed with these new workers. They will by necessity learn a second language and thus be more useful as adults. I bet these kids will finally get some real discipline. Needless to say, the minimum wage has to go, along with such luxuries as FMLA, ADA, OSHA regulations, and all other expensive social engineering, safety net stuff.

    Taxes must be slashed if not eliminated, with the exception of taxes to support an expanded and improved national guard/military. With respect to local law enforcement, it is something that we should consider privatizing also. The remaining owners of real property should hire their own security. If someone feels the need for protection, they should simply hire a body guard to protect them or learn how to use a gun or knife.

    Health care is not a right. Individuals should just take responsibility for their own life. Let's send that message in clear and unequivocal terms. If someone can't afford to go to the doctor, then that's life . . . or death (LOL!). Lets be honest, does anyone really give a crap about whether someone's else dies because they can't afford medicine. I don't! Death is simply a fact of life. Not a penny of tax dollars for health care.

    All public lands need to be sold to the highest bidder, including highways, parks, whatever. Private owners will certainly do a better job maintaining streets, the costs of which will be covered by the revenue generated by unregulated tolls.

    Education is a lot like health care. Private schools can do the job. Get the government out of that business. Imagine how this alone would save all of us trillions in property taxes.

    Just imagine what a utopia we will have. What a great society it will be! Oh . . . about the private security . . . it really will be as necessary to your survival as food, shelter and health care. God oh mighty I can't wait.

  • Report this Comment On February 21, 2009, at 12:08 AM, dennismueller60 wrote:

    I am dismayed by the quasi religious comments by most responders. It seems that there are a whole lot of libertarians and far right conservatives (the Goldwater type of conservative, not the Pat Robertson type).

    An interesting question is "Do we want to be a people with shared values and concerns who are willing to make some sacrifices for the common good or are we a people who share geography, but it's basically every man for himself?"

    It seems clear that a lot of the responders to this are firmly in the "every man for himself" camp.

    The views expressed here on health care, education, and the stimulus package seem to be reflections of how one answers the basic question regarding your personal responsibility for the common good. What makes financial sense, seems to come into play with a lot less passion.

  • Report this Comment On February 21, 2009, at 12:09 AM, gercle wrote:

    I believe I can sum all the current economic issues in two words;

    Were Doomed.

  • Report this Comment On February 21, 2009, at 12:13 AM, Galileo001 wrote:

    I generally agree with your writings. I do see some things that are wrong and yet don't find them mentioned. For example, the Mortgage companies/banks were doing predatory lending. Give sub prime loans to the less capable, have them pay what turns out to be "rent" for a few years while asset values leap. then kick them out by raising the ARM rates to the point that they can't pay and voila! reap the asset gain. Ah, poor babies, their gamble didn't work. Deregulation, the great saviour of capitalism, let their greed flourish. Bail them out? punish them but save the victims.

    The next comment has to do with banking usury. They have been raising the rates for cc debt. 30%. That's almost Tony Soprano style. Who gets hurt? Those who need the money for more than a few months for real needs and then find that their ability to recover has eroded. The banks want the interest only and not the capital. Then they louse up the credit scores with too much outstanding debt. Deregulation's gift on this one also. How about only 10% for a change without punishing those who are paying it back.

    Where does this go? Push too hard and Chapter 13 overflows.

    Let's beat on their greed till they scream and put the regs back.

  • Report this Comment On February 21, 2009, at 12:23 AM, channah1973 wrote:

    Feb 20, 1:02PM :

    I don't want the bailout to be terrible. I believe it is terrible whether I do anything about it or not. (In fact, my trepidation is because I don't know what I can do about the disaster of the bailout being passed.) Also, the bailout does not reflect political compromise, it is the plan of one party.


    Feb 20 5:21PM :

    I am unsure what you are suggesting these Rugged Individualists do. I personally do not care for the idea of civil war, which is what comes to mind when I hear you say "change our social contract". I don't really know any good place to go either. There is a lot of socialism and evil (considered as separate entities) in the rest of the world, the US has been a comparative haven up until now. I also don't understand why you should expect me to take responsibility for people I didn't vote for doing things I don't want them to do, and even worse, doing them in my name. Why should I not at the very least object loudly enough that I have a chance to shift public opinion so that perhaps in a couple years less people will vote for people doing these things.

  • Report this Comment On February 21, 2009, at 12:30 AM, halftide wrote:

    I I read the postings with morbid out of body fascination. We are apparently rearranging the chairs on the Titanic! I don’t really care what the minutia is. The ideologies from the left right up and down are obscuring the necessary analysis. NO where in the conversation is there a quiet discussion on the errors that brought us to this world economic crisis? This is a stochastic problem. Single dimension thinkers and ideologues should paint rocks behind the building. The problem started right here folks in the good old USA. It started with the hubris that economic c markets could be diverted through legislation to fulfill a political/social agenda without exponential economic correlations when you burn primary resources. Cause and effect! The housing bubble popped! The crap that created and supported it turned into fluff. Imagine the hubris that we had so much wealth that we could afford not to develop our own energy resources and send our gross national product to people who don’t like themselves and like us even less. It takes incredible hubris to have an economic model that doesn’t predict a negative result of this thinking with a huge “bite us in the fanny “exponent.

    Richard you are a smart guy. You describe the present mess well but I fear you have drunk the cool-aid because you fail to state with clarity that this Hail Mary, dumb, throw money in the air maybe something will stick program is addressing the CORRELATION not the cause of the economic problem. The correlation is an exponential multiplier of the cause. There isn’t enough MONEY to match the huge multiplier in the correlation. If you told me that this was a two stage attack one on fixing the cause and the other on mitigating the correlation I would have much better sleep at night.

    In the mean time I am looking to follow someone whose model points out the errors and predicted the results and offers a description of the cause and I am not particularly impressed with those who are running around baffled.

  • Report this Comment On February 21, 2009, at 12:56 AM, shellouise1 wrote:

    Here is the bottom line for all of you greedy, stupid neconservative, libertarian fools - have it your way, and there will be war on American soil - a civil war, a class war. Do you really want to cut off your nose to save your face?

    All the responsible folks who loose their jobs as the economy is sucked dry of life, then loose their homes, and everything else - they are going to insist that you share the pain one way or another. They will be joined by those who believe in the virtue of shared prosperity. I expect that those who were conned by many of you - who promoted, marketed, profited from, ARMs, those poor fools who bought the lie that buying an expensive home was actually a smart financial decision. Indeed, as the children of this combined group grow into disillusioned hopeless teens, with a firm understanding that they have no real future, they too will join the ranks of the infuriated. Pray that you don't cross their paths.

    Every day that you sickening neocons rant and rave about the use of tax dollars to stimulate the economy and to provide a safety net for people harmed by this economic disaster reinforces my belief in your intellectual and actual dishonesty, your ignorance, arrogance and narcissism.

    You all need a Swift kick in your moral compass.

  • Report this Comment On February 21, 2009, at 1:17 AM, dign4gold wrote:

    You cannot "think of your fellow man" (comment above), when it is not a level playing field. Unfortunately for us- let's say for argument's sake that 99.9% of men are good at heart, you still have the golden rule: "he who has the gold (and in our case the power) makes the rules". When greed and corruption enter into the equation i.e.: banking and gov't in this case, trust and common sense leave, panic ensues, and man tends to think of himself and his family first- a "survival of the fittest" if you will. Even the most reverent person still has a hard time feeding his own to the lions before his neighbors. The only way to "even the playing field" again is get back to basics- education, hard work, moral values, respect, less government, more freedom. This "throw-away" greedy society we now have will self-destruct soon enough, socialism will take over, then hopefully our natural American tendencies will re-surface and the pendulum will swing the other way. As my grandfather used to say: "nature is a balance, everything in moderation." History repeats, unfortunately.

  • Report this Comment On February 21, 2009, at 1:26 AM, murali333 wrote:

    Enlightening & incursive article, I should say. However, nobody seems to have the answer to the question "Where has all the money vanished?" Banks have lost billions world over and surely, this money has not vanished into thin air. The money is out there lining some "fraudulent" pockets and the investigators should endeavor to discover soon, if not already done.

    On another note, Regulations (new & old) should be enforce-able and defaulters sent to the guillotine, no matter what.

  • Report this Comment On February 21, 2009, at 7:23 AM, DraganM2008 wrote:

    ...It is hard to believe how far this 'bailout mongering' can go.... The author didn't bother prove his thesis that a 'fincial crash' would happen beyond the 'fact' that one of THEM 'said' it would 'happen for sure'...

    Instead, the author and these guys want us (!!!) to prove THEM that the crash would NOT happen....

    I could rest my case just right here without even mentioning Stalin and his famous: "You prove that it would have been bether for Russia without Red October."

    However, I will add something also. The strength of our country has been built on the respect and protection of the free markets, unrestrained innovation and efficiency of the 'invisible hand of the market'.

    Socialism has failed everywhere you look at that throughout the history. Not will even the "messiahs' like Obama, Pellosi, and the rest of the 'progressive-socialists-but-never-created-a-buck-in-business' now raise to the economic/business sorcery they already claim to themselves....

    After all, just a few months ago Pelosi and Clinton were publicly hugging one of their 'magicians', Mr. Stanford of Texas....

    So instead of the immediate jail-in of those who intentionally tried to bring down our financial system, these 'messiahs' are 'bailing-out' already spent ideology of far left by spending non-existing monies to advance their 'progressive' agenda, which in turn will create 'feel-good' atmosphere among the masses, which will then start feeling like the Utopia is all around us, vote for it again and again, and thereafter (THEY hope) live happy forever and have many children -- all on a free, non-corrupt, top-notch 'like congresmen' health insurance....


  • Report this Comment On February 21, 2009, at 7:29 AM, prayingfool wrote:

    i hope this bailout does something for the regular person who purchased a home at a cost she could afford making sacrifices. I pray that my loan is fannie mae or freddie mac secured. Further, I pray that the fact that I have made the necessary sacrifices to keep my loan current is not held against me. i am paying the cost of other folks getting better exotic loans - i could have got a crazy arm but thought that was foolish. my house is very much underwater, so the approximate $80000 I put in has vanished. And my loan is above 6 % when I see signs for 4.5% everywhere. For the sake of the country, if some of the fools have to be bailed out, I hope I am one of them!

  • Report this Comment On February 21, 2009, at 7:59 AM, makohunter wrote:

    This may be overly simplistic on my part but here goes....

    I have watched my BAC stock drop precipitously....a once strong company sink after it's acquisition of Merril Lynch ballast.....isn't it time to throw that stone overboard?

  • Report this Comment On February 21, 2009, at 8:05 AM, titanicdwn wrote:

    I seriously doubt anyone will care to hear what I say, no matter how many times I am right. It's over people. The United States of America is reaching the end of the line and heading for the same scrap yard as the U.S.S.R. Yugoslavia, etc... It is really getting old people. The U.S.A. was a nice ride while it lasted. It is time to move on. Land is still cheap on Mars.

  • Report this Comment On February 21, 2009, at 8:33 AM, offthepoint wrote:

    A run on the banking system amounting to trillions does seem frightening as an alternative to goverment bailout.

    However, those trillions would ultimately have been re-invested somewhere - and that 'somewhere' would mark the evolution of capitalism into something stronger.

    We have now thrown away that priceless opportunity in favour of a mediocre stalemate that will preceed rampant inflation.

    Shame, really...

  • Report this Comment On February 21, 2009, at 8:34 AM, blondy1215 wrote:

    HEY, Wake up people! Has anyone heard of the GLASS STEAGELL ACT ? A law that was in place for over 70 years to prevent .....great another depression. Senator Phil Gramm pushed the REPEAL through Congress and Bill Clinton signed it, back into law! CREDIT DEFAULT SWAPS is what caused this whole damn mess! Put a nickel down and win a dollar. Multplied by billions. As a independent I would like to add, It was the Republican party that tried 12 times too have the reinstated and were shot everytime. IMAGINE THAT

  • Report this Comment On February 21, 2009, at 8:38 AM, McDunnough wrote:

    There are few things as contentious as the clash of ideologies. I, for one, wish economics could move beyond that level of debate, but it appears the emotion connected to policies and decisions that so directly effect our personal lives is unavoidable.

    It makes little sense to me to cling to a staunchly capitalistic, or socialistic perspective. Both systems present areas of glaring inadequacy. The house is clearly on fire: we need to put the fire out before there is nothing left to save.

    Looking at the situation with as little ideological bias as I can muster (being human objectivity is a goal not an operative) I can see no other choice open to us sans government spending. The root issue is liquidity. Wealth has been sucked from the system. Money has simply disappeared. Creating jobs by funding the arts, bridges, research, or parks cleanup puts some of that money back.

    Tax cuts aren't enough. One has to have income to lower taxes upon. It is unrealistic to suggest that providing even a $1000 tax cut to the average working family is going to tangibly impact their lives.

    Anyone who has run a business knows that labor is seen as a cost center. Lower my taxes in this earnings environment and I will transfer that pseudo-income straight to my bottom line to keep the investors and analysts off my back - and my job intact. Adding another 100 employees is not going to be the first order of the day.

    It is, of course, dangerous, to point out the reality that this situation is a result of inherent flaws in the capitalist system as we have employed it. It does not make one a socialist to see where capitalism errs, anymore than working for a corporation on salary and investing in mutual funds and a few stocks makes one a capitalist.

    The Market is not a god that miraculously sorts out the perfect value of everything and is always right. The market is the result of the accumulated fears, hopes, calculations and decisions of millions of partially informed people taking their best guess and hoping it will be profitable.

    We cannot rely on soviet style central economic planning and government control - that has proven to be a catastrophe. We cannot rely on profit driven, laissez-faire without adequate government oversight - that has proven to be a catastophe.

    Its time to put slogans and "isms" aside and take whatever steps are needed to put liquidity and confidence back into the system.

  • Report this Comment On February 21, 2009, at 9:37 AM, logicalthinking wrote:

    The government/political parties have caused the excessive panic in the stock market and lack of confidence in our future because of the way the TARP and stimulous packages were so hurriedly passed. There was so little, or really no, time for US citizens to read, evaluate and assimilate the proposed legislation. I take more time to write out my weekly grocery list than the full congress did to read and evaluate all this new legislation! The Democratic legislature had obviously spent many days/months writing the thousands of pages of the stimulous package and were prepared to push through the bill without allowing sufficient forethought and input from the public. They would not even allow one week of time for us to reflect and discuss the bill. So now we feel helpless, hopeless, hoodwinked, angry, powerless, fearful and stuck in our tracks. Few of us have the stomach, confidence or resources to move back into the stock market or expand our small businesses. Without buyers, the market can not go up, nor sustain a rally for any lenght of time. In the past ten years, both our psyche and our portfoilos have suffered through the collapse of the tech bubble, 9-11, the housing bubble, etc.We are now determined (hope and pray) that we will not be tricked into being stock market suckers one more time. Rick Santilli expressed my total frustration very well.

  • Report this Comment On February 21, 2009, at 9:38 AM, Savannahguy wrote:

    McDunnough, you seem like a good, friendly, well-rounded sort and you're right about the clash of ideologies becoming contentious, but it is the very "isms" and ideologies that have gotten us into this mess. The economy, culture, politics and society cannot be separated. One drives the other.

    Today, probably more than ever before in this Republic, ideology is at the center of the economy. Redistribution is not an economic stimulus, it is the enforcement of an ideology. That ideology is not necessarily (rarely) held by the politicos that latch onto it, promote it and legislate it into law... they simply sell it to the voting blocs and interest groups that want something for nothing. The politicians could care less about fairness. They use welfare and theft (redistribution) to gain and keep their own political power.

    Politicians know that our society has been indoctrinated to believe in the takeaway-handout program. They also realize that many apolitical, unwitting citizens are frightened, therefore ripe for the picking with scare tactics.

    Oh, and don't be lulled into thinking that liquidity and other traditional financial methodologies will work this time. It's gone too far. This is not a mathematical problem and there are no silver bullet or quick tactical fixes to this. This is a currency event, a political coup, a cultural shift and we're seeing a Weimar Republic repeat of history.

  • Report this Comment On February 21, 2009, at 9:52 AM, Savannahguy wrote:

    Reading through this blog, it amazes me that so many liberals are on a capitalist blog such as this. Oh, I know... they like to make money too and it's a free world (for now) where freedom of speech is one of the most cherished rights granted by our Constitution. You remember... that pesky parchment document currently being stomped on and shredded by the new regime in Chicagoshington.

    To the folks here that keep up the same, tired, adopted talking-points argument that conservatives are greedy and liberals are compassionate, "feeling" people, you must not have seen the news. Perhaps you’re just clouded from years of Kool-Aid drinking.

    Here is a fact-based truth that is undeniable: The vast majority of donations to non-profit and charitable organizations are... those greedy conservatives. Does that fact make you liberals among us “feel” better?

    That fact probably does make liberals happy. Someone else is footing the bill. The ideology of liberal is to bloviate, castigate and legislate, but not participate. Have you ever noticed that?

    The socios want a "Fairness Doctrine". Wonder if anyone will be counting the hours and column inches of the one-sided liberal chatter on all of the networks and most of the newspapers across the country regurgitate every minute of every day? Of course not. If there was fairness in the doctrine being bandied about, the aired views of Olberman, Matthews, Couric, Moyers, Krugman and 95% of what we get from CBS, NBC, ABC, MSNBC, CNN and PBS would add up to a windfall of ink and air time credits for conservative viewpoints. But that would be fair.

    Fairness Doctrine is just more propaganda from the Marx playbook. If you want to silence the opposition, control the media and silence the opposition. If you want to control the masses, create public indoctrination facilities (government schools) to soften them up for about 50 years until society turns into a nation of whining, self-absorbed, irresponsible culture of entitlement.

    Next, reduce the middle class with exorbitant taxes so that “upper class” is a minority of elitists. When those conditions are set, force banks to make mortgage loans based on social engineering and political maneuvering, not on the credit worthiness of buyers. When that is complete, we’re almost there.

    Now, add a Greenspan, a Clinton, a Global Gore religion, a Bush, Pelosi, Reid, Frank, Dodd, Schumer, a Democrat party that would rather destroy the country than relinquish one ounce of political power and a Republican party that has become spineless and we’re almost there. Next, mix in Obama with his Chicago machine and Paulson, and voila… a bloodless coup d’état. All the right conditions were in place. Almost forgot the key ingredient in all of this: 54% of the people in this country, give or take a few million illegal John Doe and Mickey Mouse votes engineered by ACORN.

    The final stage is the redistribution of wealth, which has already begun in a big way. To the person that posted, “wonder where all the money went that was lost by Wall Street”… it is now in the pockets of a few. Many of you have lost your money and now they have it. Pretty clever, eh? That’s how it works. Redistribution is not someone coming to your home, knocking on your door and asking for donations.

    No, they simply mail you an IRS form that basically tells you that, if you have worked hard, played by the rules, lived within your means, saved and now have “more than your fair share”, you get to give most of it to them. Then and only then can we “feel” good because we are helping those that need it most? You will need to keep it up by working until September before you get to keep a dime. How’s that for incentive? But then, incentive is a dirty word to socialists. It implies greed. The result is lowering the output quality of products, decimating the GDP, losing our most valuable, innovative resources…all due to punishing the best, brightest, most talented and hard working.

    Marx would be tickled pink with events in the US. Khrushchev would feel cocky and vindicated for his “UN shoe tirade”. They would both tell us with glee that communism, fascism and totalitarian rule would follow socialism.

    We are witnesses to the destruction of our economy that will send the country into a long-term Greatest Depression. The stage is set, the stars are aligned, the political party is in power and “Change” is rapidly being set into policy for a massive economic, government and societal change. The rules, rights, laws and policies will all be written and voted in to accomplish a socialist agenda of change. This country is on the edge of a cliff.

    To wind down my rant, I’ll circle back to a Motley Fool-like ending. For those of you that want to effect change, use your fingers for something other than blogging. Try the keypad on your phone. Call your Congressman and tell them what you want them to do. You are their boss. You give the orders. If you don’t, the roles will surely reverse.

    To the investors among us, I have a question for you: when the dollar is worth 25 cents, what will equities cost you? If you cash them in, what will you be able to buy? Hyperinflation is within a stone throw from us. It is a currency event. Bernanke has shot his last wad. The Fed is powerless to do anything but print money. The printing presses are rolling. Dollars will be dropped from helicopters. Everybody will get a big handful of nothing much. But they will “feel” good.

    Do yourself a favor. Don’t be fooled by the talking heads, don’t be fooled by the superficial and contrived “feel good and patriotic by sharing your wealth” and don’t wait for things to recover this year or next. The stock market is going to give you a big fat head fake before it goes to 5000. Currency is not paper much longer. Well, maybe toilet paper.

    Sorry to go on so long. End of sermon.

  • Report this Comment On February 21, 2009, at 9:53 AM, schmidlapbanker wrote:

    What the bailout fails to recognize is that it is dependent upon consumption, consumers need to spend. In a recent NPR broadcast, it was noted that the US consumers spend nearly 10 trillion a year. There is a significant portion of this consumption that was based upon the ability to borrow. The American consumer has loaded up on debt and has drained their savings to the point that 1) prudent lending would not extend any more credit to such a borrower and 2) regulatory bodies will be more critical of financial institutions lending practices than they have in the past.

    The focus needs to be on increasing the typical consumer's disposible income to increase the consumption. With debt to income ratios at 50% or higher and tax burdens in the range of 20 - 25%, there is a significant portion of the population that is trying to live on only 25 to 30% of their income to pay for food, clothing, utilities and still have enough left over for some of the non-necessities.

    Until the consumer pays off the huge debt burden, there will be no significant increase in consumption. How long will the government be able to sustain the necessary consumption and how will we all pay for the government consumption? We cannot just continue to borrow and not consider how we are going to pay for it. We are borrowing at such a level that it is not going to create additional tax dollars over what the government was receiving during the prosperous times, it is just intended to bring us back up to those levels.

    We are going to shock the system by adding $1.5 trillion in debt in less than a year.

    Seems to me that we are flooring the accelerator and the car's tires are just spinning in place because something else is blocking the path. Once the obstacle is removed, will we be able to control the direction of the car or will it spin out of control?

  • Report this Comment On February 21, 2009, at 10:22 AM, brwn8484 wrote:

    Thanks Savannahguy:

    Its refreshing to see someone that has common sense and a clear message refuting the tired, old half truths that are spouted by those that claim to have my best interest at heart. I appreciate your comments. Keep up the good work and hopefully we can change the course of the impending train wreck.

  • Report this Comment On February 21, 2009, at 11:11 AM, Haerdt wrote:

    Apologies for not taking the time to read the swath of comments, so these point may already have been addressed but:

    Iceland failed and will be better off for it. Without poorly run financial institutions clogging their domestic market, the country will recover and probably be speeding right along as one of the best in the world again by 2010.

    The U.S. on the other hand, not so much. And you're right, as Kanjorski said, the economy would have fallen apart. However, the economy didn't fall apart when the government allowed AIG, Fannie & Freddie, Bear Stearns, WaMu, IndyMac, or Lehman to fail. These institutions were all relatively efficiently cut up and resold in various sizes to other corporations. If this was allowed to happen to all insolvent corporations, then we would see a speedier recovery.

    In the words of Milton Friedman: "The economic miracle that has been the United States was not produced by socialized enterprises, by government-unon-industry cartels or by centralized economic planning. It was produced by private enterprises in a profit-and-loss system. And losses were at least as important in weeding out failures, as profits in fostering successes. Let government succor failures, and we shall be headed for stagnation and decline."

    Unfortunately, it doesn't seem like many people properly understand Friedman.

  • Report this Comment On February 21, 2009, at 11:29 AM, TheConservative wrote:

    I do not think that any of us, or them, appreciate the gravity of the situation right now. It is possibly more severe, and definitely more complex, than was faced in 1929. The additional complexities are the credit default swaps and other derivatives which link the banks, both nationally and internationally. The most critical of these links are those that cause on failure to potentially bring down scores of other banks and other institutions.

    I hate, literally abhor, what we have done recently. However, perhaps I should have written, 'what we have had to do'. However considering what has been going on in this country over the last 10-15 years, with the credit boom, housing boom, etc., we knew deep down that the correction would be a doozie. It is and it has just started.

    However, I do not think that at this time the answer is to do nothing anymore than I think the answer for a man with a malignant tumor on his arm is to take his vitamins and eat an apple a day. He needs surgery.

    I am not so quick to think anymore to think I know exactly what we should be doing. No one does because no one has been close to this road. But I do believe that the path charted has changed America forever.

    I just don't have any better ideas.

  • Report this Comment On February 21, 2009, at 11:41 AM, blackbooty wrote:

    It's time to stop talking and BUY, BUY, BUY!

  • Report this Comment On February 21, 2009, at 11:50 AM, titanicdwn wrote:

    China will give us all the money we want. We are in a new age of worthless values, disgusting values, and valueless values. Everyone is talking about 1% this and 4% that. Talk about straining at a gnat and swollowing a camel. You people are almost better than the Sunday Comics, almost. I can hardly wait for what kind of 'posititive platitudes' we can look to for new wisdom come 8/09. I just a new idea for a brand new cartoon line-up. Mighty Investor, Super Businessman, Liberal SewerMan, and Conservative Rockhead!!! Together, they will save this GREAT COUNTRY, (sic). I swear. All you people are riot. I could tell you exactly what you will be thinking by the end of the year, but whats the point?

  • Report this Comment On February 21, 2009, at 11:51 AM, titanicdwn wrote:

    Sorry. I meant 8/09.

  • Report this Comment On February 21, 2009, at 12:19 PM, RiskAverseAlert wrote:

    You say, "the bailout isn't about justice. It's about survival." Yet you also mention an "electronic bank run" whose potential damage could have resulted in $5.5 trillion withdrawn from the U.S. financial system.

    The question naturally becomes, if it's about survival, what are we trying to save? Truth is the system obviously is deeply flawed. Were it not so, could we have been made so incredibly vulnerable?

    This moment's circumstance simply reveals the illegitimacy of a huge segment of financial claims. So the issue here is not just one of solvency. Instead, the larger concern is the legitimacy of an arrangement leading to the present vulnerability. Thus, talk about "distortion of the market" being "the worst thing about the bailout" entirely misses the point. You assume the arrangement leading to these bailouts is legitimate. In truth it is not.

    Finally, calling the flawed arrangement "capitalism" sugarcoats truth. A child of fascism, however? How else best to explain the widening divide between the haves and have nots? Severe social and economic regimentation is a hallmark of a fascist system.

    We desperately need a return to the American System of Political Economy based on Hamiltonian principles of national banking. The securities-based financial system (regulated or not) is an unmitigated bust -- a fraud! And we should try to save it? I think not.

  • Report this Comment On February 21, 2009, at 12:28 PM, hutchald wrote:

    As the rest of us have to abide by. The larger the national debt the Government obligates us to, the smaller the Government should be to help pay it off...

  • Report this Comment On February 21, 2009, at 12:44 PM, mserogerb wrote:

    As the 550 Billion was being withdrawn, where was it being sent so that it would cause such a collaspe?

    Was it out of the country?

  • Report this Comment On February 21, 2009, at 12:52 PM, audifan wrote:

    There *is* something inherent in capitalism that prevents mining companies from poisoning the water supply: It kills the customers. Dead customers don't buy your products.

    The assertion "...the bailout isn't about justice. It's about survival" is also an argument that convinces someone who already shares the same belief - the belief that survival, rather than justice, is paramount.

  • Report this Comment On February 21, 2009, at 1:53 PM, Damnthetorpedos wrote:

    audifan, you just made the point. In your capitalism, the amount of poison in the water is a function of the impact on your market, so, just as long as you don't wipe out so many that it affects sales your good to go. and with everyone thinking this way I wonder how long we would last ....?

  • Report this Comment On February 21, 2009, at 2:50 PM, toddsnotafool wrote:

    I think the opinion is clear on this. So there's little more for me to add that just David in Qatar hasn't already stated. It has to be no less than 10 to 1 that our government and these bankers are lying, cheating and stealing. We do NOT believe a word they say to us. They throw bs book numbers at a us and keep screaming the sky is falling.

    Rich is finally right about 1 thing - distortion of the market. The Keynesian for you. For that reason alone they should stop doing what they are doing. But let's be honest here, the whole scheme is about billionaire bankers paying off the big government so they will in turn pay them back billions of our tax money. It's thievery and our lighting speed communication is finally enabling us all to see it while it's happening this time.

    So you want to know the real fix? Here it is: The free market (that being us) really can, in a very simple way, fix everything. Anyone who has an account or affiliation at all to any of these banks, (BofA, Citi, whomever) whether it be the form of a loan or a deposit, close it and move it. Easy as that. We don't have to let them "fail" and let the smaller good banks "buy" them up. We just do it for them. Move the business from these banks that are too big to operate and give it to the small local bank - savings bank, credit union, whatever. It may take a lot of convincing of people who may not understand this yet. But that's ok, there's no time like the present, because as of right now that's exactly that I will be promoting.

    Rich thanks for opening up this debate again and congrats on the most TMF comments.

  • Report this Comment On February 21, 2009, at 3:35 PM, nojniktolp wrote:

    The bailout assures there will never again be credibility in the banking system. Who'll enter a contract knowing the government can change it at will? Let the system fall and what replaces it will have credibility. The only thing the government should do is try to make the unwinding orderly.

  • Report this Comment On February 21, 2009, at 3:42 PM, ColoradoCowboy wrote:

    Hats off to David in Qatar. The Keynesian school of thought, that has dominated economic theory in this country, operates without question on Socialist principles that Ludwig von Mises dismantles piece-by-piece in his book "Socialism". Unfortunately, the great Austrian economist is an unknown in our colleges today.

    After 60 years of a continuous debt driven consumption boom and credit driven speculative boom we are on the shores of absolute financial failure. The sins of the past are being repeated with ever larger installments of the same poisen that is killing us. The thinking of 30 year old MBA Wall Street "experts" has created a financial hydrogen bomb that will plunge the world into the greatest depression mankind has known.

  • Report this Comment On February 21, 2009, at 3:59 PM, nojniktolp wrote:

    Coloradocowboy, What makes you think the bubble can't be inflated yet again?

  • Report this Comment On February 21, 2009, at 4:43 PM, CALinda51 wrote:

    No, AIG should NOT have been put in runoff. It is not the insurance operations that were the problem, it was the parent company's forays into exotic financial instruments that was the problem. What should have been done was to isolate the insurance operations into a separate entity, and then let the rest of it sink into deserved oblivion. And insurance companies have always competed on price, so for AIG's competitors to cry "foul" is ridiculous and hypocritical. And yes, I work in the insurance/risk management industry, but no I don't work for AIG (although I have taken a bath on the stock.)

  • Report this Comment On February 21, 2009, at 6:40 PM, wgbronxny wrote:

    How foolish is this stimulus plan? Yes, foolish, as opposed to Foolish. From my understanding, this administration said that this stimulus will either save or create 2 million jobs over the next 4 years. Excuse me, but any Fool can decipher what that sentence means. Save or create? Well which is it? Well lets assume it will actually SAVE 2 million jobs. That is excellent, however, that doesnt help the millions who lost their jobs over the last year and a half. Well now lets assume that it actually CREATE jobs. Then the question becomes "create jobs where?" Oh yes, I forgot. Jobs will be created from infrastructure. Building and repairing bridges and highways. Excellent! So if you are an engineer or contractor or anyone with skills in the construction field then you may get a job. But then what about everyone else. How many sales clerks, office assistants, teachers, bank tellers, and flight attendants qualify to build or repair a bridge. Who ever put together this stimulus clearly believes that these workers dont need jobs as well. Did we forget that private sector jobs were lost as well? If you have lost your job then it should be comforting to know that with this stimulus package, you may find a new job within 4 years. Hope you have experience laying concrete and tar!

    New York State Governor David Patterson said on CNBC on Friday, Feb. 20, that even with the stimulus money received, the state will still have massive cuts and job losses. I think its safe to assume that other states will still be cutting jobs despite the stimulus. Hmmmmm, and all along I thought the plan was to save jobs and stop states from cutting certain programs. New York State Senator Chuck Schumer said that municipalities within NYS will be competing for the stimulus money needed to start the public projects!!! Doesn't this mean that the losing counties will be Sh***** out of luck. This is insane!!!!

    OK, so there will be tax cuts. We will save approximately $13 per week on our pay checks. I can't wait to stimulate something by spending my whopping $13 dollars. That will definitely help me cover my mortgage payment.

    If you start a business and you make stupid decisions, then ultimately your business will fail! Businesses do fail. When they do, people lose jobs. They fall behind on their mortage and other obligations. If you can no longer afford your mortgage, then you need to downsize. You may even need to move into an apartment. Your car loan is too much to handle now? Well then you need to get rid of that car and get something more affordable. I understand Schwinn manufactures some wonderful bicycles! Plus, you'll be helping the fight against global warming in the process. It happens. Accept it, live with it and adapt. Those businesses that are on the brink of failing, let them fail. Those workers will eventually find new jobs. Some may even start their own businesses!!! Why get in the way of progress. We need to let the system purge itself of the irresponsible, the careless, the greedy, the stupid, and politcians!

    Wayne G.

    Bronx, NY

  • Report this Comment On February 21, 2009, at 6:45 PM, mediapro wrote:

    Saratovets wrote:

    "Mediapro, I doubt your figures. If they are correct then it is because the 80% are too busy spending too much on junk that doesn't count in the wealth category."

    Hey Fool, have you ever heard of due dilligence? Just Google "Wealth Distirbution in U.S." and you"ll drown in sources that all confirm the obvious.

    Your glib rejection of the effects of ever-growing wealth re-distribution from the 80% of us to the wealthy over the past thirty years is mirrored in just about every country that has been "serviced" by the U.S. through the IMF, World Bank, Halliburton, Bectel and the rest of the Corporatocracy.

    Do you think that it's just coincidence that the U.S. overthrow of Arbenz in Guatemala, Brazil under Goulart, Bolivia under Estenssoro, Chile under Allende, Ecuador under Roldos, etc. left the country with rich right-wing, dictators and oligarchs while the poor live in squallor and the middle class is non-existant?

    The idea of wealth redistribution in those countries is finally, as Rev. Wright so eloquently stated, our own chickens coming home to roost.

    If you subscribe to the myth that you too will one day become one of the 1%, then you are a bigger fool for it. It's simply part of the trickle down plan to keep the poor schmuck waving the flag, making this country safe from Communism, Islamic radicals or whatever convenient boogieman of the day seems appropriate.

    Since you are apparently too lazy to check facts before writing: "In contrast, the congressional budget office has determined that the spending bill WILL have a net negative affect on us 80%.", check out the true CBO analysis:

    The economic stimulus legislation will add between 1.2 and 3.6 percent to economic growth by the end of next year, according to the Congressional Budget Office.

    The legislation would also create between 1.3 million and 3.9 million jobs by the fourth quarter of 2010, compared to the baseline forecast.

    The nation's unemployment rate would be between 0.6 and 2 points lower than the baseline forecast of 8.7 percent by then, according to the CBO's analysis.

    When comparing tax stimulus and spending/investment expenditures and their effects on ROI, the CBO concluded:

    Tax cuts and rebates = $1.02/dollar returned

    Spending identified in the House Stimulus Bill = $1.59/dollar invested.

    For all the neo-cons hanging on to their true beliefs, perhaps these postings will kick in a little cognitive dissonance at best.

  • Report this Comment On February 21, 2009, at 8:16 PM, Savannahguy wrote:

    Mediapro, you are just that... a media pro. You're a Google genius.

    You've done a fine job of Googling until you found all the statistics that fit your socialist, America loathing, conservative bashing ideology. Add half truths to your "lies, damn lies and statistics" and you're set. Neat little tactic so overused by leftists.

    Mr. Clip & Paste, remember this: for you to play the little trick of finding fault with conservatism or American foreign activities throughout history by regurgitating what you've read on a site, you foolishly assume that all Independents, Republicans, Conservatives and Americans actually believe that we have never erred. That is not the case. Like every other country in the history of civilization, individually and as a country we have made mistakes along the way. But you knew that.

    Yet you persist in the juvenile tactic of pointing out the errors to condemn the Republic or the conservative ideology. Don't be such a Pollyanna when it suits you. Need I cite a few blunders by Dems, progressives and socialists (it's getting redundant in here) throughout our history or just point to current failing countries to convince you of the bias and shortsightedness of your rambling?

    Go back to Google and clip your response. I'll watch for your paste. Before you do that, check out the Communist Manifesto. You'll find material there.

    You see, libs are not the only ones that can attack and ridicule like you did with Saratovets. I, for one, have had enough of letting your kind get away with saying anything without retort and like-kind response. Get used to it. You'll see a lot more as conservatism rises up and refuses to sit by and let jerks dominate the media.

  • Report this Comment On February 21, 2009, at 8:28 PM, Odessaday2 wrote:

    The $180 billion stimulus program in the spring of 2008 failed. The $345 billion housing bailout from the summer of 2008 failed. And the $700 billion Wall Street bailout from the fall of 2008 failed.

    Now what???????

  • Report this Comment On February 21, 2009, at 8:50 PM, mike4757w wrote:

    Savanaguy- I won't waste anyones time, you have it right and everyone should listen but, they will not. Good read!


  • Report this Comment On February 21, 2009, at 9:02 PM, APlaceInHistory wrote:

    What A True Stimulus Package MUST Contain!

    Regenerate the U.S. and World Economy "Top Down"

    19 Feb 2009 February 19, 2009 (LPAC)--Lyndon LaRouche emphasized in discussions today that we have to correct the mistakes the Obama Administration is making with its stimulus plan. The machine tool part of the former auto sector is the crucial factor in this development. With the collapse of the auto sector now in Europe as well as in the U.S., we have to have the same policy in Europe as in the U.S. We need an international policy, not merely a national policy. We also have to get the Russians in on the same policy. Then you have it. Take the machine tool capacity of the former auto sector as the crucial factor. Save it. Save the employees of the former auto industry. Forget automobiles. Use the machine tool part of the former auto sector as the driver for recovery.

    The only way to revive the expiring U.S. and world economies is to take a "top-down, physical science" approach in emergency measures to regenerate basic infrastructure, essential functions, and agro-industrial capacity. The `stimulus' plan must be revised on this principle. Lyndon LaRouche has discussed this in detail in three webcasts since mid-January. In his Jan. 16 webcast, he recounted the history of how the U.S. successfully built river management systems, rail systems, and accomplished other feats of production such as mass aircraft assembly in World War II. He said, "We did it on the top-down approach. We start from science at the top level, physical science! You go down from physical science to machine-tool design, as a by-product of science for production design, of production of the essential components which go into anything..."

    The following list reviews in brief, indicative parameters of what is needed in three sectors of the U.S. economy. At present, at least 21 million persons--13 percent, of the total U.S. workforce--are out of work, or very under-employed. Multi-millions of new jobs will be created in the course of carrying out a real, science-based development program.

    I. High Speed Rail and Maglev

    Today's U.S. rail grid (about 99,250 miles of Class I track) is nearly 60 percent less than in 1929, with freight and passenger services almost non-existent for most parts of the country. The place to start to modernize and expand, is with electrifying 26,000 route-miles of the rail system. In the second stage, another 16,000 route-miles should be electrified, bringing the total up to 42,000 route-miles. This would cover all key passenger and freight rail corridors that transport more than 60 percent of all U.S. rail traffic. Maglev lines can run along strategic continental routes.

    The requirements for this are worked out, including for building nuclear power plants, transmission lines, step-up and step-down transformers, and for what is "saved" in eliminated petroleum fuels. The impact would be tremendous in increasing manufacturing and economy-wide productivity.

    This program will be re-published in the EIR online Feb. 24, from a 2005 article by Hal Cooper and Richard Freeman (June 10, 2005, Vol. 32, No. 23, "Congress's Mission for Bankrupt Auto: Build USA Electrified Rail Network.")

    II. Nuclear Power

    The threat and incidence of black-outs and brown-outs in the U.S. electricity system are now a constant feature. Whereas per capita electricity generation grew at a rate of 7 percent a year from FDR's 1930s until the late 1970s, then came the decline to where over the 1995 to 2000 period, overall U.S. capacity grew only 1.5 percent, and thus, it went negative per capita.

    What is required is to resume an all-out nuclear power development program, along the lines originally planned for "2000 by 2000" U.S. nuclear plants for the 21st century. Worldwide, there are only some 400 nuclear plants in operation today.

    In the U.S., applications have been filed for 28 new power plants, to be constructed on the "brownfield sites" where a generating plant or two may exist, but the full complex of several plants was never completed. This is a start. But additional sites need to be selected, in order to fill out the national "economic map" for the future, where new generation centers are in place to power intended industrial, agriculture, transportation and residential purposes. Accordingly, the transmission grid must be expanded, and employ such technologies as superconducting cable.

    There are "off the shelf" designs for power plants, including the Westinghouse AP-600 and AP-1,000; the General Electric Advanced Boiling Water Reactor (ABWR); and others. In addition, "fourth generation" nuclear plant designs can be readied for mass production. These are advanced, high-temperature gas-cooled reactors.

    To go nuclear, requires reconstituting the U.S. capacity for heavy industrial output, to produce the required components, especially pressure vessels; this is in line with the renewed manufacturing capacity needed for refurbishing the entire infrastructure base of the nation.

    Some rough parameters of job creation: "Approximately 4,000 workers are needed at each site at the peak of construction, and each new plant requires 400-700 employees. To build about 35 new reactors, about 38,000 jobs will be created in the nuclear manufacturing industry." In addition, another 20,000 are needed over the next five years, to take the place of the estimated 35 percent of the current nuclear workforce who are retiring over this period. (From EIR, Feb. 13, 2009, Vol. 36, No. 6, by Marsha Freeman, "Do You Want to Stimulate the Economy? Then Build New Nuclear Power Plants").

    III. Waterways and Ports

    Much of the 12,000 mile U.S. waterway system, of inland and coastal channels, is long overdue for improvements in its critical infrastructure of 240 locks and dams, and flood control structures and related. "The average age of all federally owned or operated locks is nearly 60 years, well past their life planned design of 50 years," stated the report released Jan. 28 by the American Society of Civil Engineers. There are locks and dams on the Monongahela/Ohio System that are over 80 years old.

    Of the 27 locks and dams on the Upper Mississippi, including the Illinois River, 26 need renovation/repair, due to age. Seven of these rehab projects were approved in the 2007 Water Resources and Development Act, but the just-passed "stimulus" bill excluded these projects from funding, because of a provision inserted by the House and Senate Appropriations Committees to prohibit allocations of funding for so-called "new starts," that is, projects that had not previously received construction monies!

    What is required is the go-ahead for the across-the-board restoration of the 12,000 mile navigation system. The January ASCA "report card" stated, "The cost to replace the present system of locks is estimated at more than $125 billion."

    Technologies exist that can expedite both renovation and new-starts of needed waterway infrastructure. E.g. "Hollow" dam walls can be built off-site and "floated" into place. These kinds of components required for locks, dams, gates, weirs, levees, port infrastructure (traffic tunnels, piers, breakwaters), plus dredging equipment and vessels, creates the necessity for re-establishing heavy industrial capacity to feed the supply lines.

    A rough parameter of job-creation is that 35,000 jobs result from every $1 billion of funding for navigation projects, according to the Department of Transportation.

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  • Report this Comment On February 21, 2009, at 9:30 PM, ladybird53 wrote:

    Thanks for an insightful analysis - apparently, you can't say it too many times:

    Corporations are not people. They are bundles of contracts, without conscience, ethics or morality of their own. That's why they need regulation.

    I get so tired of the whiskered old scream about 'socialism' as supposedly evidenced by this bailout. Why weren't they crying about this back in 1999 when Chrysler got the first bailout?

    Check out the brilliant animated graphical explanation of the credit crisis - done as part of a Masters of Fine Art thesis - on my blog:

    Thanks Fools.

  • Report this Comment On February 22, 2009, at 6:32 AM, joexps wrote:

    I am just a simple person; and this is going to be a simple letter, no big words, no politics and no economic theories. I grew up on a farm. Awhile back I was hit by a truck driver who fell asleep at the wheel. My hospital bills for the first 6 months over $400000 dollars. The trucking company had no insurance. The banks, credit card companies, etc. they all came and took everything. We tried to work out payment arrangements but no, they would not have such a thing. They wanted and got everything. Now I can't get a loan for anything. We found a place to rent, paying more than we paid for our property. My wife, 3 boys and I ate 1 meal a day for 7 months, Ramen Noodles. The property is still there, the bank is stuck with it. If they had of let us keep the property they would still be making money. Nobody came to my rescue, where was my bailout? Why am I punished for something I had no control over? The banks did this to themselves. They went for making large amounts of money by foreclosing and trying to flip the house. With the realtors inflating the prices of homes I am sure green was in the bankers eyes. Not happy with small amounts of wealth, they wanted more and more. I know people should be a little wealthy but to bath in it is another thing all together. Now those same banks and companies want my tax money. Are the banks going to be giving people back their homes and adjusting their payments to keep money flowing, I don’t think so. They are taking the same people's money (tax's), that they took the houses from and they are still ruining the people that are giving them their hard earned taxes. Will the banks get bad credit? I don’t think so. If the Government and Wall Street want money following again, give us some of the bailout, say $150000 to the tax payer. We can put a roof over our families head and maybe buy a car to save the Auto companies at the same time. I will never trust y’all investors, bankers, big CEO's again. Y'all send our factories over seas and layoff hundreds of thousands of us and still think we will have the money to buy your goods. The prices don’t change even though you pay someone 25 cents a month to make the same thing. Y'all are just lining your pockets. Think about it. If you have a town of a thousand and you lay off 200 and then they can’t buy goods in their town because they don’t have any money so the stores close up. Also we can’t make our house payments so the bank figures it can make more money if they just foreclose and sell it. Opps; everybody’s job is in another country. We can’t buy a house because we don’t have any money but even if we did, we now have bad credit so we can’t get it anyway. Then we have to take a job at Wal-Mart making less than we did before, and sell the goods we made before and still pay the same prices we did before, talk about rubbing it in our faces. Oh ya and don’t forget, the bank who took our house and did not want to work with us and find a payment we can all live with, is going to get our taxes from our last pay check. Again let me get this right, you tell us, you closing the factory to move to another country to be able to compete, and on top of that you pay someone in another country 25 cents a month to make the same goods and sell it at the same price, to us. Then the bank takes our houses to sell real quick and make a profit. Oh; ya, and don’t forget the last pay check’s taxes are going to the bank that put us and our families out of our home. You want us to think y’all know what to do with our money, I don’t think so. Like I said give it to us and let the American people get our country back on the road. We could get our homes back if the banks are willing, I doubt that. The people that still have a home could get their payments back on track. We would probably buy a car and then that would save the car companies. But no, you just want to line your own pockets with free money. Some banks are so greedy they don’t want the money because they will have to work with the people that are behind in payments. I think the people in that community should take their money out of that bank and move it into a bank that is working with people to keep their homes. Think about it. Hope I didn’t offend someone.

  • Report this Comment On February 22, 2009, at 7:44 AM, sylvanpc wrote:

    Thanks Savannahguy

    "Hear, Hear!" It is an abbreviation for "hear, all ye good people, hear what this brilliant and eloquent speaker has to say!"

    I googled (urban dictionary) "Hear, Hear!", so the others would understand. ;)

  • Report this Comment On February 22, 2009, at 8:12 AM, ozziefox wrote:

    All this reminds my Ayn Rands novel Atlas Shrugged. With all this government bailout are we opening ourselves up to a Socialist/Facist state?

  • Report this Comment On February 22, 2009, at 9:35 AM, Savannahguy wrote:

    Ladybird53, you are right… corporations are not people. After that profundity, you make it crystal clear what you think of corporations, by stating, “corporations are not people but bundles of contracts and without conscience, ethics or morality of their own”. That comment tells me where you stand. Perhaps corporations would be best run by androids. Or maybe they should all be nationalized to remove greed, unfairness and corruption.

    Then you drop in, “whiskered old scream about 'socialism' as supposedly evidenced by this bailout.”

    Another comment that reveals your beliefs about those that own and manage corporations. Without a stretch, one could deduce that you think old, whiskered men run those evil corporate empires and scream about socialism when the government wants to regulate and control them for the good of the proletariat. I get the picture.

    Let’s back up for a minute. I’ll keep it simple. Corporations are owned and managed by people. Those that manage the corporation hire other people to help them make products or provide services. They are called employees. The corporation’s products and services are sold to, uh, other people. The people that own the corporation and the people that work there all depend on the customer or the consumer. It is the consumer that ultimately determines if the product or service is worthy of buying. Freedom of choice is power to the people in the most beautiful, unregulated way.

    No need for government intervention. Good products sell, bad products fail. Same with corporations. It’s usually the same with those individuals that own and manage corporations.

    If the corporation makes good products, provides useful services for a reasonable price to consumers that want them and manage the company well, the corporation gets bigger, makes more profit, hires more people, invests in more ‘stuff’ and increases capital expenditures to enhance infrastructure to make more and better and cheaper products and services. Then the evil corporation can, without conscience, hire more people, buy more stuff from suppliers and engage more people to construct warehouses, buildings and evil office buildings.

    Oh, and in this scenario commonly called free enterprise in a capitalist system, competition actually makes everyone better. Keeps everyone on their toes and productive, so to speak.

    Everyone wins.

    Call it trickle down (a hated term by libs), trickle up, capitalism (another hated term)… it is not redistribution. In this simplified example of commerce, the employee has a job, the contactor has a project, the office supply company has a bigger customer, the consumer is happy with newer, cheaper, better performing products.

    Due to the corporation hiring more people, the grocery store, auto dealer, real estate firm, the clothing manufacturer and the widget maker have more customers. There is money being earned and spent. If people make enough money, they need to invest. They can then smartly subscribe to Motley Fool (shameless plug for our hosts).

    Hey, even the corporation wins. Since corporations can’t have feelings and are not human, I’ll assume you meant the “immoral, unethical” old, whiskered owners of corporations. Yes, they win too. CEO’s, Presidents and other such capitalist pigs make the big bucks. Why is that, do you suppose? Could it be that they had the audacity to invent something while we were tending to our own business? Maybe they took the big risk for a big reward?

    Anyway, maybe we’ll see a paradigm shift in your thinking about corporations… but I have the sense that you may be a bit set in your ways and simply point to the few rotten apples among corporate leaders. By the way, since you invited us to visit your blog to view the animated clip that “explains the credit crisis”, I have to say, the graphics and the production was superb. For accuracy, you may advise the creator of that fine video to add in the parts about how banks were basically forced to make bad loans by the likes of Chris Dodd, Barney Frank, Raines and crew.

    Wait, it’s a Masters of Fine Art thesis project? Oh, never mind. For a good grade in college, maybe best to leave that part of the truth out. After all, won’t want that talented student to get failed by a professor over having the “wrong” political view.

  • Report this Comment On February 22, 2009, at 11:04 AM, vendurra wrote:

    The problem with socialism and capitalism is that they ignore the 3rd variable... The power of motivation and ambition. America has lost it, it had it in WWII, the orchestration of the moon landings and the building of the great road networks called the interstate highway system, aptly named after Eisenhower who was the principle archetect of the plan.

    That was good government because it saw responcibility or a created responcibility and saw the objectives to the end. That is the kind of government we need.

    When Obama had the idea to repair America's infrastructure he had the RIGHT idea, not the moronic conservative idea where we should privatize the road network and have paralyzing tolls on every highway. That is ridiculous. I have never seen conservatives argue a worse argument. Conservatives don't like the responcibility of running a country, so they would rather just privitize everything and let the country go to pot. I've never seen a worse president than Bush, he spent billions on nothing.

    Remember all prices are a pseduo-tax. This idea of privitazation creates pseduo-taxes. Ok, so you're paying less in taxes, but now you have the tolls (road bills), garbage bills, and other ridiculous stupid little things you have to pay every month because of privitization. That's under the conservative theory.

    The problem with the entire conservative argument is that you can't reduce taxes, you can only shuffle the money that has to be spent around to the private sector.

    And you know what, I rather pay taxes once a year, than write a check to my garbage man every week. *Cough*, now that is what we call saving millions of people time. And I like the idea of the current road network, without having to stop every five miles on the interstate to pay a toll (e.g. tax to some corporation rather than the government) Either way, it's money out of YOUR wallet. It's time to kill the conservative theories, and look at reality for once. Lest we end up with someone worse than Bush, and I don't think that's possible. Even if Obama turns out to be half as worse as Bush it will be because Bush set him up for failure by leaving him a massive mess to clean up.

  • Report this Comment On February 22, 2009, at 12:52 PM, tugdrvr wrote:

    To joexps;

    I too am just a simple man. I cannot offer extravagent commentary on this bailout mess. I am one of the fortunate ones who still maintains a job and a home, my family's heart goes out to you and your family, I wish I could offer more. Maybe that in itself is part of the solution, Americans taking REAL care of other Americans. Those that have, giving just a little to those who have nothing anymore due to circumstances similar to what Joexps has described. It's all over our country! I believe that the leaders of the failed financial institutions and the leaders of the teetering auto giants MUST be held accountable for their screwups! Don't reward them for running their companies into the ground! Take THEIR houses, take THEIR golden parachutes, make them work in community service and face the people who they helped ruin! I operate a tugboat and barge on the West Coast transporting fuel to different ports. If I screwed up on my job to the degree that these execs did, do you think my company would reward me with a bonus and tell me to just go away!? HELL NO! I WOULD BE IN JAIL! If we take the tangible assets of the irresponsible "Leaders" of the failed financial instiutions, then just maybe people like Joexps would at least have a chance at keeping a roof over their heads. I realize this is a elementary and wishful course but as I said at the beginning, I am just a simple Fool but I'm willing to stand up and do my part for the country and people I love.


  • Report this Comment On February 22, 2009, at 1:28 PM, shellouise1 wrote:

    Necons - just keep ranting and raving on and on, lying to yourselves, making up facts, tuning into Fox News, spreading your BS as if it were the gospel delivered from on high, patting yourselves on the head for your imagined humanity and virtuous character (someone up there made a point how necons give more at the office).

    I know how hard it is for all of you to accept responsibility for your own mistakes in judgment. Its hard to be wrong, and harder still to admit it. The economic meltdown is your mirror. It goes to the very guts of your self-definition. It challenges your value system, specifically "tooth and claw capitalism" ("let the buyer beware"), a value system that equates wealth with holiness. A fair number of you necons desire theocracy and believe that your interpretation of capitalism is endorsed by God.

  • Report this Comment On February 22, 2009, at 3:36 PM, Savannahguy wrote:

    “Necons - just keep ranting and raving on and on, lying to yourselves, making up facts, tuning into Fox News, spreading your BS as if it were the gospel delivered from on high…”

    shelloise1, you have the talking points and the angry attitude down pat. You’ve learned to regurgitate liberal talking points well enough, yet you probably don't even know why you disagree with "necons" (sic); therefore you resort to accusing others of "making up the facts" as you either are incapable of doing or just didn't demonstrate it in your post. "Making up facts" is a shallow liberal tactic we see every day and I for one am getting tired of it.

    State the opposite of the truth, say it loud, say it often with indignation, tell your opposition to go get the facts (when you have none), toss in personal insult, play the self-aggrandizing, self righteous “caring for the people” and there you have it, the classic liberal argument.

    For once, I'd like a socialist to tell me why that system works and tell me the effects it has had on every single country that has ever adopted it. Then tell me why everybody in the world is clamoring to get into the US.

    The differences in Dem/Lib/Socialist and Repub/Conservative/Capitalist is simple and fundamental to our beliefs. Libs believe the government should have ultimate power and rule. Conservatives believe the citizens should have the power. It’s that simple. Notice, I didn’t condemn socialists or say that they are misguided.

    Libs want the government to make our health, wealth and lifestyle decisions for us because we, the great unwashed, are too stupid to do care for ourselves. Conservatives want the government to build infrastructure, defend us from enemies and provide a “safety net” for those that cannot care for themselves. Libs want a welfare state. Freedom vs. Totalitarianism, Capitalism vs. Socialism. Those are the simple differences.

    If you or any liberal blogger believe that your sectarian and/or socialist value system or politics is better for mankind, cite me one single example of a successful socialist or Godless country. Just one.

    No doubt you'll come back with more empty rhetoric, not practice. Your ideas will "feel" good and on the surface, sound humanitarian, but in practice they suck the very life out of individuality, freedom and country. The democratic, free enterprise system has it's flaws, as you and your cohorts like to dwell on and point out, yet with all of it's flaws, America is by far the greatest country with the most freedom and wealth of any country in the history of the world.

    Our American heroes have fought and died for the ideals we hold dear and have shed blood and died in foreign wars so that people like you can indignantly spout of your socialist blather any time you choose. Some of those countries would have your head or mine for even uttering the things we say in a small, private group, much less a blog for all to see.

    Perhaps it would do you some good to mix a little Fox in with your Michael Moore, Bill Maher, Air America (are they still bankrupt?), Daily Kos, Moyer, et al. I realize how difficult it might be for liberals to seek balance when every long absorbed influence and long held ‘group belief’ system rejects even the slight consideration that your ideas are potentially wrong. Unfortunately, due to the popular trend of revisionism, you can’t even rely on many history books to reveal truth to you. O you clip and paste your talking points from the liberal websites. It's 'groupthink' at its worst on display.

    You’ll only see as clearly as your ideology allows. You’ll think that the Weimar Republic was a fictionalized account of pre-Nazi Germany written by right wing fanatics. You’ll believe that Gorbachev ended the cold war. You’ll try to besmirch Christian conservatives as bible-thumping, gun-toting, right wing fanatics, when by doing so, you only reveal a darker, sad issue with yourself.

    You’ll buy into the farce that Global Warming (renamed climate change so as to include cooling) is a climactic event being caused by man, not a religion of socio/economic comeuppance and redistribution. You won’t accept that Global Warming has already been discredited by many of the world’s most renowned climatologists, including the very man who introduced Al Gore to the idea. So many beliefs can be adopted from so many sources. I suppose if Tim Robbins and Sean Penn say it, then it must be true.

    Long practiced behaviors and ideologies are hard to break, but you should try. Sincerely, you really should, if you are interested in truth. Start with the Constitution, the Bible and the Declaration of Independence and go from there. Re-learn what you have failed to learn about our great country.

    Ran across a quote the other day that seems fitting in this spot:

    “Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.”

    - John Adams

    By today’s liberal standards, I suppose President Adams would today be referred to as a far right, religious wacko neocon, as would Washington, Jefferson and Lincoln. We could sure use men like them today in Washington.

    William F. Buckley, we miss you.

  • Report this Comment On February 22, 2009, at 3:37 PM, mediapro wrote:

    For our little Savannahguy and the others who would prefer to live in their cloistered world of Limbaugh worship, I wish you well.

    For the rest of us that can actually read, absorb, contemplate and reach our opinions through facts, not "lies, damn lies and statistics", perhaps the lessons from this dangerous supply-side experiment leaves us with some more rational adults trying to extricate us from this mess.

  • Report this Comment On February 22, 2009, at 3:43 PM, Savannahguy wrote:

    Mediapro reveals his liberal tactic of personalizing once again, since he has no original ideas to share.

    Intellectual smallness revealed. Fascinating, in a social studies sort'a way.

  • Report this Comment On February 22, 2009, at 3:45 PM, mediapro wrote:

    Sorry, but this latest laugher from savannahguy is just a bit too much to ignore:

    "The differences in Dem/Lib/Socialist and Repub/Conservative/Capitalist is simple and fundamental to our beliefs. Libs believe the government should have ultimate power and rule. Conservatives believe the citizens should have the power. It’s that simple."

    Pick up a book on American expansionism since WW II and look at how foolish is your simplistic analysis. For anyone to imagine that there is any difference in who runs the government and on who's behalf it is run, then I've got some oil wells in Iraq that you can have for a song, even if that song cost us nearly a trillion dollars over the past eight years.

    I know that might be asking a bit much to actually think about challenging your finely fixed world view, but whoever thought that our country would be broke?

  • Report this Comment On February 22, 2009, at 4:11 PM, TheHague wrote:

    I believe it was said we are now in debt to the tune of $15,000 for every man woman and child because of the bailout!

    It seems to me that if W or B wanted to stimulate the economy in real and measurable ways that they would just mail a check to every citizen of the US for the amount that each us will owe for the bail out down the line!

    I can promise you that the economy would get stimulated immediately! Instead both have given the money to those who stole it in the first place!

    Nice job guys!

  • Report this Comment On February 22, 2009, at 4:23 PM, mediapro wrote:

    Hey savannahguy. If you are such a free market, free trade kinda guy that you couldn't actually answer the frustrated post from the guy who actually understands egregious taxation, please explain the following:

    1. Our effective cost per gallon of gas is ~$10.00 when one factors in the roughly $30 billion dollars in tax subsidies ANNUALLY provided to the oil and gas industry. This is the most egregious, downscale tax imaginable. Moreover, the oil and gas companies simly need to bid and secure future leases and INTENT to drill for the largess we reap upon them every year. This ponzi scheme against the American taxpayer is one of our dirtiest tax secrets.

    The attempted movement away from an oil-based economy is long overdue. Eliminating these subsidies and replacing them with a carbon tax and offsets would be a dandy replacement for current outlays while returning the investment towards modernizing the electrical grid and smart energy technologies. Even an oil guy as purile as T. Boone Pickens has attempted to wake up and smell the coffee.

    2. Add to that tax subsidy the protectionist import rules on sugar, milk, etc. Removing sugar tariffs alone and replacing this supply with a much more efficient cane sugar ethanol source could end the corn producer/fertilizer manufacturers stranglehold on the taxpayer's neck. If one wants to make the small farmer argument, then set resdiency, gross receipts and size requirements on farm subsidies. This reward for planting inefficient crop supply and for NOT PLANTING crops drawfs even the oil subsidies.

    3. For people who don't count the payroll, FICA, SUI, etc. automatic worker payroll contributions while conveniently ignoring the offshore accounts, shell businesses, and other manipulative uses of the tax code by those who can afford tax attorneys, don't be so quick to condemn the extra pittance through earned income tax credits and such put into the pockets of those who actually contribute a day's labor for a fair wage vs. the incredible sums paid to those who move money through the system. Look where that system of rewards has put us.

    4. Finally, would someone please explain to me why there is a ~$100 K cap on wage contributions to Social Security?

  • Report this Comment On February 22, 2009, at 5:09 PM, Savannahguy wrote:

    Mediapro, I'm not sure where you got your data or if you just banged it out on your keyboard because you know these subjects so well, but I'll go ahead and shock you... by agreeing with most of it. We have common ground. That's a good thing.

    As long as we understand that you cannot convert from oil energy to alternatives overnight and you can't send the nation into meltdown by punishing, overtaxing or nationalizing oil and coal producers. Remember, if you want ethanol from corn, sugar cane and other natural sources you are raising food prices and polluting the environment. Fertilizer runoff and oil burning farm equipment won't solve your carbon or economic problems overnight like a magic bullet. Sounds good though.

    By the way, I'm heavily and actively involved in the protection of the environment, sustainability and products that are classic clean energy technologies. So, even conservatives care. Just don't throw the baby out with the bath water and develop new technologies without destroying old ones.

    You're a lot nicer when you state facts and opinions without the cynical and stuff and snide remarks.

    So, I'll buy you a beer. What's your preference?

  • Report this Comment On February 22, 2009, at 5:14 PM, Suitsme2 wrote:

    I hate banks more than anyone - Downsized from one at age 52. Trained as an economist - I think you have to keep them afloat. But not their shareholders.

    Yellow Trucking just secured a bridge loan - had they not just imagine the huge amount of unemployed drivers, (70,000). Without loans the world as we know it could spiral down to a 2nd great depression.

  • Report this Comment On February 22, 2009, at 7:49 PM, mediapro wrote:

    Thanks savannahguy.

    Most of that data came from a recent forum on energy and tax policy sponsored by the CPB. You had business, NGO, tax, environmental and local and state government experts in a moderated exchange of ideas.

    The point of my exchange with you was to get beyond the dichotomies cast by "isms". IMHO it is the ideoloigcal divide and trench warfare between conservatisim and liberalism, religions and secularism, etc. that gets us into trouble.

    As for separating facts from opinions, the earlier comments on the roots causes of our economic downdraft wasn't intended to solely focus on the latest episode in creative economics instigated by disciples of Freidman.

    Eisenhower was the first President to so publicly voice America's terrible truth when he warned in his waning days in office of the growing threat from a military-industrial complex. There was very little difference between Kennedy, Johnson, Nixon, or Ford's foreign policy in how this country continued on that false path of Pax Americana. It's just that when Reagan et. al. began applying the same wealth accumulation strategies in the name of free markets, the game became so rooted in ideology, that these neo-conservatives began to believe their own rap.

    If you want to read a first-hand account of how American expansionists plied this philosophy around the world, I would recommend John Perkins, "Confessions of an Economic Hitman". Perkins turned his back on the oligarchs that shaped these interventions in other countries out of shame for his earlier actions and wrote a very telling memoir, naming names and citing very specific plans of economic and military attacks when economic coersion no longer worked.

    Oh yes, it's Heinekin.

  • Report this Comment On February 22, 2009, at 8:08 PM, numberichuck wrote:

    You're mostly wrong on all your points on the housing bailout. What happened here, and everybody blames it on the borrowers which is false; is that you take out a loan for the most emotional purchase in your life, the great American Dream, based on the past prices of gasoline and groceries. (You're two most expensive non-mortgage expenses.) Next, they triple or quadruple eating up your disposable income. My gas bill in 4 years went from 250 per month to 850--there went 600 out the window--thank you very much George and Dick. Next, my grocery bill did the same. 600 + 600 is 1200 and that's what a house payment month doesn't tear u up too bad..but after 6 months of this you wonder where your money went. And that's what happened to most people. Add in layoffs, illnesses, late charge card fees, a false scoring system by the credit bureaus and you have a foreclosure crisis..not speculation...Who new gasoline and groceries would go thru the roof ?

  • Report this Comment On February 22, 2009, at 8:49 PM, emhtennis wrote:

    I could barely get past the first paragraph of this article, and apparently its the rebuttal article! Capitalism does not have blind spots. Government creates the blind spots. To use your example, if a company releases cyanide into a river in a purely capitalistic society whoever owned the stretches of polluted river would sue the company and a judge would award fair compensation for the property damage. But because no one can "own" a river (at least not anymore) the government has to 'regulate' pollution. It is much more inefficient and leads to corruption issues. Capitalism is about taking responsibility for everything you do, both positively and negatively.

  • Report this Comment On February 22, 2009, at 9:34 PM, jsextoncol wrote:

    I personally am getting a bit fed up so many people with bashing the banks and bank executives. Yes, there are definitely some scum out there - like the executive management of WAMU who created a "sell at any cost" environment that led to unethical employee behavior. Notwithstanding the heartbreaking "simple person" commentary, most of the problems started initially with widespread societal greed - "have it now, pay later" attitudes. To satisfy this avarice, lenders created easier terms, the Federal Reserve under Alan Greenspan drove interest rates too low (stimulating borrowing), and the Government promoted excessive use of mortgage loans by creating an artificial home finance tax break (concentrating the borrowing in mortgages). Now, however, our society is faced with a second wave of borrowers who acted responsibility but find themselves owning more than their home is worth, trying to pay for their mortgage on one instead of two incomes as layoffs accelerate or perhaps simply having two incomes that have been cut due to salary or incentive reductions. This responsible group of borrowers is worth saving, not just because I (and others) are soft hearted, but because the total cost to our society will be far less by at least trying to stop the bleeding. Moreover, if one looks into patterns of lending, Bank of America in particular acted responsibility by comparison to most institutions. Yet, it does now find itself in trouble in large part due to the spread of the problem to the second wave troubled borrowers. I really do think Obama said it well - there is plenty of blame to go around - to unethical bankers, overzealous (greedy) borrowers, lax regulators, and our legislators themselves. We need to stop bashing someone and work on solutions - one by one, homeowner by homeowner, business by business, bank by bank. Our society is in deep trouble. While I lean toward capitalist solutions, I also think in this situation we need to work together, accept some imperfection in the programs, look toward the good of the whole, not our own selfish interests. Obama's mortgage related proposals are a good start - they should help many borrowers enjoy lower payments and others to stay in their homes even though they might already have defaulted. If we stop the bleeding for these persons, our whole society will begin to benefit from more stable housing, lending and financial markets.

  • Report this Comment On February 22, 2009, at 11:03 PM, NoOracleHere wrote:


    Thank you for your thoughtful reply.

    I believe I said why everyone can't get compounded returns. It's because they are based on a fallacy. You supposed everyone can have compounded returns just as long as they are low enough (2% you suggested). I agree there is something to this. If we keep the return low enough (2%) then it falls below the level of inflation. In this case it turns into a compounded loss.

    The only way everyone can have a sustainable compounded return is for the money supply to grow to sustain it. This can happen, of course, but then it isn't really a return, is it?

    You said I was perhaps simplistic. You are correct, of course, aren't we all? Actually, I was unapologetically simplistic. No model is as complete as the real thing. Thinking back again, I might amend what I've said so far. Though compounded returns in cash can be sustainable for everyone only if the money supply grows, compounded returns in assets can be sustainable for everyone only as the supply of assets grows. This is difficult, but possible. It would be a mark of a healthy economy. It does not seem to have been a feature of our economy for the last 10 years.

    What I didn't say about the speculative economy is that the flow of money is necessarily upward. You'll accuse me of being simplistic again, but if it takes money to make money, then he who has more makes more. Who he makes it from will usually have less. Money flows to who has more.

    A feature of the productive/consumptive economy is that money flows downward and goods flow upward. Those who have wealth don't engage so much in the production of value but instead are disproportionate consumers. Those who produce goods and services are less apt to be consumers. They tend to allocate more of their income to paying on a mortgage or car loan, or credit card loans. They must produce more than their income reflects or they don't remain employed. They don't have great savings or investments and thus don't supplement their incomes in these ways.

    I am not trying to overload this description with value statements because in truth, we need both economies to be healthy. It is the downward flow of money in the productive/consumptive economy that allows the speculative economy to even appear to be sustainable. We need the speculative economy to provide the capital for economic growth. But moreover, we need the two economies to be in balance. Today we are out of balance. The speculative economy has been overheated for too long, and people were even giving their homes over to speculation. It is not just the homes market that was overheated, although they grabbed the headlines. Stock values continued to climb as the goods/services markets were drying up beneath them and the dollar was collapsing. Today, even the money supply has collapsed as banks failed, and the remainder got suddenly more conservative. Manufacturing exited our shores in droves.

    We can get back in balance again, but not if the only thing we "stimulate" is more speculation.

  • Report this Comment On February 23, 2009, at 10:05 AM, OneBQuick wrote:

    Hey folks, I am a simple blue-collar worker.

    I would like to know why all this free money is going to the banks verses going to the people who are working. It seems to me that if the government gave just $200 k to the people who own houses to apply to their home loans and get a better loan set up then you would not have all these foreclosures. This in turn would result in spending to buy new cars and other luxury products thereby putting more money into the banks. Everybody wins.

    Also, I want to know where I can get access to read these stimulus packages so that I can understand where our money is going.

    Seems like the hard working Middle American taxpayers are going to get the shaft while the rich get richer.

    When is it going to end?

  • Report this Comment On February 23, 2009, at 10:27 AM, soccergirl5612 wrote:


    I didn't read your original column, but I liked your rebuttal. I especially liked your point about ideology. We need to look at each possible solution on its merits, not beg the question by making ideological assumptions about the facts. Keep up the good work.

  • Report this Comment On February 23, 2009, at 11:29 AM, SolarInvestor wrote:

    I don't agree 100% with the stimulus package, but I do love the fact that we finally have a President who is trying to help the people instead of one that is just stuffing his and his friends pockets.

    Republicans keep thinking they are good for the economy, whereas Democrats are tax-and-spend. But, in my lifetime, if you look at the end of each era, you see a very clear pattern. In 1992, at the end 12 years of Regan/Bush, the economy was terrible. In 2000, at the end of 8 years of Clinton/Gore, the economy was in great shape with a budget surplus. Today, after 8 years of Bush/Cheney, we're even worse than in 1992. That's a pretty clear pattern.

  • Report this Comment On February 23, 2009, at 12:35 PM, skat5 wrote:

    Everyone is entitled to his opinion, but not to a separate version of the facts.

    I see people supporting the remedies that best fulfill their immediate wants and desires and those closest to them. This will not always be in the best interest of the group as a whole, or even in the best interest of the individual seeking an immediate benefit. If a man tears the wood from his home to maintain the fire within, he will be warmer that night, but his prospects of surviving the winter are reduced.

    Facts are hard to come by, so I leave it to others to agree whether these are facts or just opinions:

    Energy Dependence: Every administration since Nixon has said how they are committed to energy independence and every administration has failed to act. We are not 'addicted' to oil any more than we are addicted to food. For over a century, the expansion of the world population has depended upon converting energy into food and habitat, and nowhere more than in the U.S. has wealth been based upon the conversion of energy into wealth.

    Easy Credit: Sometime back in the 70's credit marketers realized it did not matter if someone ever paid off the balance owed, as long as they just kept paying. When inflation spiked, they repealed the usuary laws so any amount of interest could be charged. When some ran low on credit, the door was opened to get lower interest lines of credit using home equity, with the interest tax deductible. When worries grew about increasing numbers not being able to make that minimum payment, congress modified the bankruptcy laws to make it harder for individuals to default.

    What nonesense to point to party affiliation when both sides have fed off these trends. Expensive energy means more expensive food, less comfortable shelter, and less to spend on anything else, including investments to support your retirement or children's education.

  • Report this Comment On February 23, 2009, at 1:28 PM, rmiers wrote:

    HISTORY, HISTORY, HISTORY...sorry for shouting, but I am tired of the same old parroting of the same old bull.

    Once upon a time ago we got ourselves into the same old stuff. We meandered around for several years wondering why the chicken disappeared from the pot and let the washington group have it's way. Nothing seemed to work. It ain't working now either.

    A couple of guys came up with a pretty good idea and got a law passed called the Glass/Stegall act (1933), which in fact said a bank could be a depository bank or an investment bank, but not both. This was done to keep banks within certain limitations to insure safety. A modern day firewall. Glass Stegall had many safety provisions including the FDIC.

    Seems to me, slick Willie and his democratic congress did away with certain provisions in the law 1999 (google Gramm, Leach, Bliley). No wonder the press or wall street neglects to mention this little hydrogen bomb of our financial stability.

    Other little problems like being able to sell shares of stock you don't own (uptick rule)(and not paying for them if things go bad) and the mark to market accounting rules might have contributed to a financial pirate's disneyland. (the above laws and regulations are recent)

    TV's Jim Cramer bragged he could take a rumor and a few million and run a stock down five or six bucks on live TV and nobody said a word (or comments were stifled)

    None of this could have happened with good government, a free press and a honest financial institution community.

    The word is, "it started with two hedge funds" and ended up with hundreds of wealthy folks driving down the once great United States of America.

    Ask why all of our top financial people (treasury and federal reserve) come from Goldman Sachs???

    Please tell (don't ask) your government to fix these rules as they are still gaming the market.

    Liberal or conservative, we are all in this together and please remember "a bully never goes away"

    Laugh of the day!!! Obama stimulus gives huge tax incentives to buy private true where did he get all that money for his campaign?

  • Report this Comment On February 23, 2009, at 2:12 PM, plecke wrote:

    Our current representatives seem as parties to fight over our votes. Once elected they spend our money foolishly to maintain thier power only. It is time to throw off the yoke of our present none responsive gov't and exercise our second amendment rights.

  • Report this Comment On February 23, 2009, at 2:25 PM, plecke wrote:

    I am 50 years old. I can remember as a kid people talked about John Birch and what a kook he was. Well 50 years later it looks like he was exactly right. The hippies of the sixties are in charge now. Read Atlas Shrugged if you have the stomach for it and then go out and purchase your guns and ammunition. You will need it hopefully to throw the bums out of Washington if nothing else for the coming civil unrest. New Orleans (Katrina) was just the dress rehearsal.

  • Report this Comment On February 24, 2009, at 12:20 AM, trenton1ryan wrote:

    You're all gonna die some day, and judging by some of your posts, it's not going to be more than a decade or two, so stop worrying so much.

    No matter how you slice it (phrase it), what comes around goes around. Everyone culpable will get theirs. I sleep well at night knowing that. Yes, it helps that I have a secure job, but I have kids like many of you, and I want the best for them. The reality is (probably) that it won't be as good as we've had it. So what-that's the way it goes. The guy who lost his house and had to eat Ramen got the short end of the stick. We'll all get a turn at the short end of the stick.

    People are inherently bad, and when they act in concert, really bad things eventually occur. Pray hard everyone-we all need it (God) more. And pray for the WHOLE BOAT, cause we're all in the same one whether you like it or not.

  • Report this Comment On February 24, 2009, at 7:38 AM, Savannahguy wrote:



  • Report this Comment On February 24, 2009, at 7:39 AM, Savannahguy wrote:

    Well, I suppose bolding and italicizing is not possible.

  • Report this Comment On February 24, 2009, at 7:42 AM, Savannahguy wrote:

    "Please tell (don't ask) your government to fix these rules as they are still gaming the market."

    rmiers, your 1:58 was spot on, but I'd have to add a line after yours that I quoted above. Something like...

    Since many in our government are themselves the "gamers", call for their heads, expel them from office, throw them out of politics, bar them from practicing law or investment firms and before the go to jail, have them do a well publicized "perp walk" for all to see.

    "And pray for the WHOLE BOAT, cause we're all in the same one whether you like it or not."

    trenton1ryan, true enough, although a decoupling will be required at some point. When that happens, I have a feeling you'll be in the good, seaworthy boat.

  • Report this Comment On February 24, 2009, at 7:55 AM, Savannahguy wrote:

    A Fool's question for this Motley crew:

    Regardless of your political views or interpretation of history, I'm interested in hearing what you folks think is the best investment in this economy... short (3 months) and in 2009. Not just equity picks, but any investment. Could be a particular stock about to jump, real estate, precious metals, mergers & acquisitions, art, antiques, whatever. I'll even volunteer to save the picks and post them at the end of May and at year end.

    Or not... maybe this blog is about to melt down and everyone here will scatter.

  • Report this Comment On February 24, 2009, at 8:09 AM, JohannR wrote:

    This is so nice to look at from outside the US. Who would have believed a few years ago that the biggest debat in 2009 in the USA would have been around nationalizing bank and other private assests?

    Can't believe these CEO's begging for tax payers money. These same people do everything they can to avoid paying taxes, yet they are on their knees to get tax money. Now its "we are all in the same boat", yet when they make millions they create tax havens and cash in on multi million bonus checks...all for themselves!

    Wake up! Fire all these top managers and start fresh with new learders, not from the same MBA schools with the same ideas. The US/EU/world need new approach, CEO's that look at future wealth not just quaterly profits, good old school US companies that manufacture in the US, even if it make them slightly less profitable, that see future value even if share holders are upset over bad margins for a few quaters...

  • Report this Comment On February 24, 2009, at 11:14 AM, jkgmot wrote:

    Capitalism has created this great country, and the main formula of this system is making profit.

    But I think the great pioneers of Capitalism of the past had characters, and they probably put a couple of things ahead of profit making in the priority list - like the family, and may be the country - I don't think they wanted to make profit at the cost of the family and the country. But toady's Capitalist here is trying to make profit at all cost, because of which, the last 25 years, this country is steadily going downhill - compared to the rest of the world. Our technological edge is being sold for profit, our industrial might is being sold for profit to foreign competitors, while this country has been hurting . So, Capitalism, the way it is being practiced, might have made a few people overly wealthy, didn't really work for the rest of the country for the last 25 years !! So, I don't agree with you on this subject - that (uncontrolled) Capitalism will find the right solution automatically.

    All systems have bright and dark sides, including Capitalism. I think, we are now operating in the dark side of Capitalism - almost blindly. If we let it proceed without control, it may severely damage the future of this great country. But every time some patriotic fellow voices this concern, some people starts screaming "don't control Capitalism" !! I think these are short sighted, greedy people who are in the process of killing the goose who laid the golden eggs !!!


  • Report this Comment On February 25, 2009, at 1:16 AM, 1stGradeStudent wrote:


    Which Chrysler bailout in 1999 are you referring to?

    I'm aware of a federally guaranteed loan to Chrysler in 1979.

    From Time Magazine: 20 August 1979

    Congress passed the Chrysler Corporation Loan Guarantee Act of 1979 on 21 December 1979, but with strings attached.

    Congress required Chrysler to obtain private financing for $1.5 billion -- the government was co-signing the note,

    not printing the money --

    and to obtain another $2 billion in "commitments or concessions [that] can be arranged by Chrysler for the financing of its operations." One of those options, of course, was reduce employees wages; in prior discussions, the union had failed to budge, but the contingent guarantee moved the union.

    On 7 January 1980, Carter signed the legislation (Public Law 86-185):

    Under the leadership of Lee Iacocca, Chrysler doubled its corporate average miles-per-gallon (CAFE). In 1978, Chrysler introduced the first domestically produced front-wheel drive small cars: the Dodge Omni and Plymouth Horizon.

    In 1983, Chrysler paid off the loans that had been guaranteed by US taxpayers. The Treasury was also $350 million richer.

  • Report this Comment On February 25, 2009, at 11:14 AM, FoolishDJM wrote:

    Richard, I think your article and rebuttal are right on the money. The bail out is not ideal, but it is far better than the alternative. Some commentators are free and easy with labels they may not understand. Government interventions in the economy that we have seen in the past, and including this bailout, are hardly Marxism.

    Marxism is the absolute control of the means of production by the state. In my view, this cannot but lead to bureaucratic despotism and loss of personal freedom. The government cash injection is not overthrowing capitalism but is akin to oiling the gears of our capitalist engine; without the lubrication the engine could seize.

    What's more [excuse my tangent], past government interventions in the form of regulations and cash injections probably saved capitalism and democracy. I'm thinking primarily of the initiatives of the 1930s and early postwar period that sought to readdress the power relationship between management and worker, and introduced social programs such as Old Age Security. In those desperate times, we competed for the hearts and minds of our people with the heady ideologies of fascism and Marxism, which preached that capitalism was dead and that they alone possessed the solution. To those who faced hunger and destitution these ideologies must have presented terrible temptations. But the genius of the English-speaking peoples, in our tonic mix of capitalism, social democracy, personal freedom, Common Law, and Judeo-Christian values, is our ability to re-invent ourselves and yet remain true to ourselves. We succeeded against the Great Depression, fascism, and Marxism then. And we shall succeed again today. The bailout, I think, will support this endeavour.

  • Report this Comment On February 25, 2009, at 7:16 PM, drhink1 wrote:

    Looks like history, as usual, likes to repeat itself. President Carter signed the Depository Institutions Deregulation and Monetary Control Act 1980 right before leaving office. Within a few years, Savings and Loan institutions become insolvent, mainly due to underwriting bad real estate loans.

    Fast forward 19 years later. President Clinton signs the Financial Services Modernization Act of 1999, aka Gramm-Leach-Bliley Act – again, right before leaving office. We’re seeing the disastrous effects of the bill’s (no pun intended) deregulation of commercial and investment banks. Although it took a few more years for lenders to implode this time, bad real estate lending practices again were the general underlying cause.

    The bailout money today would be better spent to pay the cost of government receivership, just like when the S&L’s collapsed. The $125 billion spent by the government to fix that mess looks like a bargain today. We’re not talking about government ownership of ALL the banks – just the ones that proved to be the worst run banks of our generation, like Citi and BofA are certainly at the top of the list.

    And while we’re on the subject, why isn’t anyone shouting to undo these two major deregulation acts that started us down this 30-year death spiral of deficit government – and consumer - spending?

  • Report this Comment On March 02, 2009, at 12:02 AM, JPMillerHOU wrote:

    Mr. Gibbons wrote:

    “Although I said that capitalism has the occasional blind spot, that's far from a condemnation of free markets. Few would argue that when Freeport-McMoRan (NYSE: FCX) builds a gold mine, it should be allowed to let cyanide leach into the drinking water of nearby towns. There's nothing inherent in capitalism that prevents that sort of behavior. It's a blind spot that we correct through regulation. We have laws because complete free markets neither protect people's rights nor result in a stable society. So, it's unclear why saying that capitalism has blind spots should be controversial.”

    Ayn Rand defined capitalism:

    "Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.

    The recognition of individual rights entails the banishment of physical force from human relationships: basically, rights can be violated only by means of force. In a capitalist society, no man or group may initiate the use of physical force against others. The only function of the government, in such a society, is the task of protecting man’s rights, i.e., the task of protecting him from physical force; the government acts as the agent of man’s right of self-defense, and may use force only in retaliation and only against those who initiate its use; thus the government is the means of placing the retaliatory use of force under objective control."

    Rather than being blind to the violation of the property rights of the nearby towns capitalism is the system that recognizes those rights as well as the rights of the gold miner to dig in his ground. As long as neither forcibly violates the rights of the other they are free to act. Mr. Gibbons is also too loose in his use of the term free markets as though freedom were a license to commit any atrocity. One has to ask “free from what?” The answer is freedom from the initiation of force; freedom from violation of rights. The government’s proper function is to intervene in defense when rights are violated not to regulate presuming someone will be guilty in the future. Regulation is the introduction of socialism – centralized planning and control by the government rather than planning and control by free individuals.

  • Report this Comment On March 02, 2009, at 10:40 AM, texjammer wrote:

    I have spent quite a while going through all the comments from both this article and the original. I agree with much of what I have read in the comments, but not so much with the two articles.

    I doubt anyone will read a post this late after the article, but I think the majority has totally missed the cause of our current problems. The Founding Fathers were small business men, farmers and family men. Their main concern was to have the general public represented by those with common values. The biggest problem we currently face is that we have fallen too far from this simple principle. For far too long, we have been ruled by lawyers that have no business or economic experience. How could anyone expect someone with no practical knowledge to run the largest employer in the world - the US government.

    The solution to our current problems may be somewhere in the comments listed above this post (I especially like some of Dave in Qatar's ideas), but the most important one is only stated once or twice. VOTE THE CURRENT INCUMBENT POLITICIANS-FOR-LIFE OUT OF OFFICE!!!!! As long as these professional consumers continue to bleed our country, none of the previously listed solutions will have more than a temporary affect. Until they are removed, we will NEVER be able to pass term limits to keep the people truly represented.

    The incumbent professional politicians have too much of a financial advantage to let the average person have any chance of ever winning a federal election. Have you ever wondered why every Representative and Senator have personal worth so much more that the national average? The current politicians - both Dem and Repub - are only concerned with increasing their own power and importance. Every crisis is just another chance to get on TV to prove their importance and increase control over us.

    The free market will eventually balance itself, with or without regulation. Regulation just makes the market take longer to rebalance, due to an advatage for the non-regulated. The current housing crisis is due to a great many factors that have been explained and argued very well in the previous posts. But the one thing every one of them has in common is that THE POLITICIANS FROM BOTH PARTIES HAVE CAUSED THIS!


  • Report this Comment On March 05, 2009, at 7:02 PM, cann211 wrote:

    I am not for bailouts in a capitalist society. I'm also not for massive, global, economic failure. The global financial players invited inbreeding to the point that no one moves alone - for better or worse. I'd like to see financial markets be required to have "risk insurance" to cover massive stupidity (or even minor stupidity) which is required by almost everyone else. This would allow self-regulation, no bailout at the end of the line (that would have to be the tough love stand), and a self-paying "bailout" for the oops. The understanding is that in lieu of bailout - which no one wants, you get insurance. When the insurance is gone so are you - bye bye! Everyone from individual consumers to boards of directors are required to have insurance. There's no bailout for consumers (ever), no bailout for industry (usually), why should there be yet another Bush brother (Jeb & George) free-for-all to financials every generation?!

  • Report this Comment On March 07, 2009, at 8:16 PM, 1stGradeStudent wrote:

    mediapro attacks savannahguy and suggests a carbon tax!

    For what purpose?

    The atmosphere contains 0.038% CO2. Man contributes 3% of that. So, man's contribution to increased CO2 in the atmosphere is 0.001%

    CO2 is non-toxic and a poor GHG and is required to sustain plant life on this planet.

    Water vapor is an effective GHG and makes up 95% of the earth's atmosphere. Al Gore even agrees with that in his congressional testimony.

    Can't do anything about the water vapor and we probably can't do much about the CO2 either without spending a boatload of money. We would need to double the output of every carbon fired power plant for CO2 capture.

    Sit in a car in the middle of the Sonoran Desert at high noon with the windows up and I'll show you global warming. Interior surfaces get hot and you can't breathe the air.

    Al Gore shows his graph of atmospheric temperatures and CO2 concentrations on a time scale so large that the change in CO2 concentration lagging atmospheric temperature changes by several hundred years can't be seen.

    His sixth grade student who can obviously see how South America matches Africa is a moron.

    And Al Gore gets the Nobel Prize. Big deal. So did the guy who invented the lobotomy.

  • Report this Comment On March 07, 2009, at 9:28 PM, 1stGradeStudent wrote:

    "Water vapor is an effective GHG and makes up 95% of the earth's atmosphere."

    should read

    "Water vapor is an effective GHG and makes up 95% of the earth's green house gasses."

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