I say forget the bailout and things will work out sooner or later. Yeah, we will all suffer for a while, but the banks will suffer along with us! Why should we, who are losing our jobs, home, etc. give the banks a slap on the hand along with $700 billion dollars. You wouldn't reward your child if they do something wrong, now would you?!

ListenToMe - The plan wouldn't help people that default on their mortgages.

janesvillian - you have to go back a few years to see how government interference and the Fed caused the housing bubble and resulting mortgage meltdown.
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2002, Bush spoke "We want everybody in America to own their own home," His challenge:Create 5.5 million new minority homeowners by the end of the decade. In 2003, he signed the American Dream Downpayment Act
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By 2003, Greenspan took interest rates to historically low levels, from about 6.5% to just 1%.
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In 2004, HUD required Fannie Mae and Freddie Mac to buy more subprime morttages.
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This all resulted in $1.4 trillion in subprime mortgages. So, who do you want to bailout? The millionaire bankers? The homeowners who maxed out their home equity and were counting on 20% annual home price increases? First time home buyers who bought with nothing down, and signed interest only loans ? And again, bailout with what money ? The government is broke.

raystone, the Republicans are suddenly pushing this line that it was government low-income mortgages that created the bubble, but no reputable economists believe that convenient and recent explanation. Most of the problem mortgages were given to middle-class people who maxed out their HELOCs to pay off consumer debt (credit cards, SUVs, etc.). Everything was fine as long as housing prices increased because it always raised their debt ceiling. The banks were happy because they had already sold the risk off ("tranches") to somebody else ("credit default swap"). The government's role in this was primarily to step back and let it happen; the bank auditors were cut back and the "market" was supposedly going to solve itself. Well, look where that laissez-faire approach got us. No, this was not a government-created mess. This was bankers, and home buyers, and uneducated, overconfident investors in bizarre securities that not even trained economists could place a hard value on, all chasing money that wasn't theirs but seemed, for a time, to be free. A classic bubble and a classic example of group behavior. Regulation is supposed to predict these and head them off before they get this bad. Why Paulson didn't act when the TED rate began spiking last spring is a mystery.

I don't like it because they are rewarding irresponsibility. I bought a $100,000 house on a 30 year mortgage because I knew I could afford the payments and haven't fell behind. Guess I should have taken that $175,000 variable loan, been irresponsible, ended up in foreclosure, but then got my butt bailed out by the government. I would have had a nicer house and all my sins would have been forgiven.

If our federal government has 700 billion dollars to throw around for a bailout, I say give half that amount back to the 300 million adult taxpayers so we can pay off our debt which in turn would help the banks. Maybe if we didn't have to work four months out of the year to pay taxes we could afford our mortgage payments! The current bailout scheme will only increase taxes for the middle class while the fat cat CEO's get richer.

zoom - the bailout is extreme.
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Taking $700,000,000,000 of taxpayers money (actually creating new inflationary dollars) and giving it to the unelected Secretary of the Treasury, ex Goldman Sachs CEO, to spend at his buddys' banks is extreme.
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"Bailout compared to Karl Marx". Marx wrote the proposal to bring about the “centralization of credit in the banks of the state, by means of a national bank with state capital and an exclusive monopoly.”
http://network.nationalpost.com/np/blogs...

However, I don't understand the urgency. Was it because Congress was about to adjourn?

raystone, you are taking an extreme view. You want no Bill at all, yet the articles you linked to do not support your viewpoint.

From the newsmax article: "Sowell conceded that not coming to Wall Street’s rescue also would be dangerous. The nation’s leaders, he said, should try “to restore as much of the free market as possible” and minimize any bailout’s reach."

The 166 economists mentioned in the financialpost.com article were aginst the original Paulson plan.

we are in for a recession? Aren't we, for all intents and purposes, already IN one?
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raystone: how would the free markets work this out? I'm not being antagonistic...just asking a legitimate question.
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I think both "options" we have suck. And, as unfortunate as it is, the economic future of not only the US but also the global market, may bank on the lesser of two evils.

BillyRay - the only thing that needs to be "done" is to let the free market work out the bubble the Fed and government created. Yes, we are in for a recession either way. A recession after a bailout (prolonging the bubble) means we are left with yet bigger government and residual higher taxes.
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This Republic became great as a result of the Constitution, capitalism, and hard working Americans. This subprime mess, instead, is a result of government pushing risky mortgages years ago, along with the private central bank, the Federal Reserve, forcing cheap credit. The Constitution and true free market capitalism need to be allowed to make a comeback to keep the country great.

Nero - here's the group of 150 leading economists against the bailout...
http://www.financialpost.com/most_popula...
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here are the free market reasons why...
http://www.newsmax.com/headlines/Bailout...

Nero, here is a link to the letter, signed by about 200 economists, sent to Congress on Sept 24th to oppose the original Paulson proposal. http://faculty.chicagogsb.edu/john.cochr...

Here is a great essay with useful references and historical background on relevant economists: http://network.nationalpost.com/np/blogs...

raystone, I agree with your stance on the bailout, but I do have a question. You state:
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"In addition, noted economists much brighter than Bernake have analyzed this situation. Virtually all have said publically bailouts here are a bad decision."
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My question is who said that and where was it published? I'm in a pretty good debate with a friend of mine over this and could use some lofty opinions to lend weight to my argument.

I agree too Raystone...the financial churning has gone on long enough.....but it's way more than being a moral issue right now. I suspect that there will be some political scapegoats (who also probably deserve it) before the actual election (could be fun watching the political manuevering there also:)).

There's no "secret information". Paulson and Bernake gave their very best fear mongering presentation to Congress. It was all on Cspan for everyone to see.
In addition, noted economists much brighter than Bernake have analyzed this situation. Virtually all have said publically bailouts here are a bad decision.

I agree, raystone. I read the 100 page bill that made it to the floor. In my humble opinion, it is a Trojan Horse filled with loopholes. Yet, despite helping to draft a very different approach, Congressman Ryan voted yea to that bill. I'm puzzled.

As BillyRay implied, perhaps the Congressman is privy to key information not available to the hundreds of noted economists who are so strongly opposed to this intervention. But, if that's not the case, then isn't the ghost of Karl Marx dancing on the graves of our Founding Fathers right about now?

ml64- Keeping this non-partisan since we are all in this together :)
Yes, more troubled financial institutions will declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company.
Bankruptcies do not mean the economy stops. There are profitable banks across the country, including local banks, ready to loan money. Bankruptcy does punish those who took excessive risks while preserving those aspects of a businesses that remain profitable.

In contrast, a bailout transfers enormous wealth from taxpayers to those who knowingly engaged in risky subprime lending. Thus, the bailout encourages companies to take large, imprudent risks and count on getting bailed out by government. This "moral hazard" generates enormous distortions in an economy's allocation of its financial resources.

Yes, Greenspan started this, very unethically too as he made his first rate cut AFTER the interest markets stopped trading for the day....all to save the almighty stock market. Who was Pres. @ the time? Bill Clinton. Our current Congress is democratic...don't they have the power to override the Pres. wishes? I'm not trying to start a huge political debate, however, I really believe that people need to pay attention and to read between the lines when it comes to "news." This is a very serious situation....banks aren't lending to other banks either to try to protect their own assets or because they don't have the money. This will stop the whole supply & demand of our economy which will affect imports and exports also. Domino effect.

The minor changes made to the bill in past days were just that, minor. The main part of the bill remained ... The Secretary of the Treasury is authorized to purchase troubled mortgages from banks.
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The government owning mortgages (read homes) and property is one of the 10 planks of Communism. If it would have passed, how would have U.S. taxpayers paid for it during budget deficits ?
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By the way, the media is reporting recently how Greenspan's star has lust its luster. They are explaining how Greenspan's dictacting to the market cheap credit fueled much of this meltdown.

I don't feel voting on this package is "following Bush". For one thing, the bill voted down yesterday was much different than what Sec. Paulson wanted--his idea was basically to print up $700 billion dollars and give it to him to "fix things". This bill was for half of that amount this year, backed up by insurance much like FDIC, but Wall Street would pay the insurance, not taxpayers. The taxpayers would be the first to get the money back when things turn around, and protections were built in to make sure no one was going to get rich off the deal.
Again, I don't like this either, but I respect Paul Ryan, Steve Forbes, and Alan Greenspan and if they have legitimate fears about a global meltdown then I don't think we should do nothing. Was Hoover correct to do nothing in 1929 or should he have pumped some liquidity into the economy to stave off that crash?

This was one vote I had hoped Congressman Ryan wouldn't have followed Bush. Ryan being an economy student and "fiscal conservative", is also a fan of economist Milton Friedman.
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Friedman always fought for free markets and would have blasted the $700B bailout proposal, as well as the previous bailouts that already occured.
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Another respected economist Thomas Sowell wrote that the $700 billion Wall Street bailout could have signaled “the end of the free market”
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Free markets didn't get the country into this mess. The Fed's articially low interest ratest and housing regulation that mandated risky subprime mortgates created the meltdown. But the free market must fix the problem. We'll suffer longer and greater with any more government intervention.

I heard Congressman Ryan on the radio this morning and the gist of his fears lies with the tightening of the credit markets. Its one thing for the stock market to drop which is bad enough for pensions and 401k's, but if the credit market shuts down we may see banks start to fail, then look out. No one likes the idea of governmet intervention in the market, but we could be looking at a global financial meltdown if nothing is done. Its no longer just a matter of some Wall Street fat cats losing a bunch of money, its much more serious.

Good points BillyRay and fool_on_the_hill. I agree that most Americans just don't know what the consequences of inaction will be. The challenge for the administration and Fed is to communicate the need, without causing panic. Just a few days ago, Washington Mutual failed after a run on deposits.

Situations like this are why we rely on Congress to do the right thing. The scary details can be explained to them, without causing panic among the rest of the nation. Unfortunately, as fool_on_the_hill points out, we have lost confidence in our Congress. On top of that, we are five weeks from an election, and some Congressmen (on both sides) seem to be more concerned about their jobs than the country. Truly sad.

During the run-up to the 2003 invasion of Iraq, our leaders in Washington warned us that the consequences in inaction would be dire. Fear upstaged reasoned debate and caution. We took action. Our current financial crisis is, in part, one of the consequences of taking that action out of fear. I'd say that the current situation is dire.

Today, many of those same Washington leaders warn us of dire consequences from inaction. Once again, fear upstages reasoned debate and caution. We must take action, we are told.

I am confident that Congressman Ryan has many reasonable fears about government interference in a free market. Because of his knowledge in the field of economics, he clearly understands the likelihood of dire consequences from such a massive interference. I would like to hear him articulate those fears as well.

If this bill is such a great idea, and such a boon to the taxpayer, why don`t we do it every year?