These are tulmultous times. No more investment banks on Wall Street

Jstas

bikezappa wrote: »

There must be other sources of money besides the tax payers to bail this country out this mess. Why do we always go to the tax payers? Because they will take it. Have another **** sandwich.

For the last **** time, the bailouts come from the Federal Reserve, NOT the taxpayers. The Federal Reserve is made up of tax monies already collected in previous years. Bailouts are low or even no interest loans that the Federal Reserve doles out to a company in trouble that has no other place to turn because they are so big. The company receiving the bailout is responsible for the loan and there are usually terms for the bailout that include the government getting a large share of the company or some other way for the tax payers whose bank account that is the Federal Reserve get to realize some of the benefits if the company sees benefits from the results of the bailout.

The reason these companies always go to the Federal Reserve is because they are VERY large and make up several percentage points of the GDP all by themselves. When a company that large goes in to trouble or even fails, it hurts the WHOLE country and drops the GDP. That devalues the dollar and pushes inflation making things more expensive.

Since these companies are so large, there are no other banks or other sources of capital to turn to that can fork over 10, 20, 50 billion in cash to get capital back in to the system. Mainly because the banks they would normally borrow from and in the same situations.

There are literally no places to turn for this so they go to biggest player in town. As much of a **** soup as everyone seems to think this country is in, there is no other company, market, country or even individual person out there that can match the economic might and financial power of this country. Let me make that absolutely clear. There is NO ONE with more money in the bank than the United States of America. The Federal Reserve has trillions, probably more, trillions of dollars in it for all kinds of reasons but mainly that's where the U.S. Government gets its budgetary money from. We balance a budget every year so that we can present what we need to the Federal Reserve. The budget has to equal or show a surplus of tax money at the end or the Federal Reserve will not release the funding for the year. We always put money back in to the Federal Reserve and it is there for many reasons beyond running the country.

Because of the Federal Reserve this country has a financial power unequaled by any other country. Add to the fact that our economy is still 5 times bigger than our closest competitor and you end up with a massive amount of power. Yeah, it's a world economy and all that **** (cause that's what it is, ****) but when the U.S. has financial troubles, it has a ripple effect that echoes around the globe.

The country is an economic juggernaught. It affects everything we do from fighting wars to sending relief. We export more grain products in the name of humanitarian aid than most other countries grown for domestic use. Yeah, we GIVE it away otherwise it will sit in silos and rot because we don't use it fast enough and if we flood the market with it, it will drop grain prices like a stone tied to a stone and ruin the grain farmers across the country. That's just one example.

But all the aid that we give to other countries for tsunami relief, AIDS epidemic relief, earthquake relief, feminine relief and so on. It comes from the Federal Reserve and bills are usually put in place to ear mark tax money to replace that humanitarian aid that comes from the Federal Reserve.

Bottom line, the Federal Reserve is a GIGANTIC cash pot that we in this country have for running our country and handling economic and financial emergencies. Your tax dollars go in to it every year but essentially, you've already paid for these bailouts and the taxes that get collected this year will likely help pay for some future bailout but your future taxes will not pay for any current bailout.

bobman1235

Thinking that just because the money comes from the reserve means it doesn't come from the taxpayers is very ignorant, Captain Angry. We're in a multi-trillion dollar national debt, "extra money" doesn't just sit ununsed, it comes from somewhere, it comes out of the budget, and has to be recouped via taxes. One way or another taxpayers will feel the burden.

bikezappa

Jstas

Thanks for the clarification. You are saying that there will be NO tax increase if the bailout is passed.

kgingras

There has got to be a massive amount of interest in the upcoming VP debate. I say we charge $39.95 pay per view to fund the bailout package.

Jstas

bobman1235 wrote: »

Thinking that just because the money comes from the reserve means it doesn't come from the taxpayers is very ignorant, Captain Angry. We're in a multi-trillion dollar national debt, "extra money" doesn't just sit ununsed, it comes from somewhere, it comes out of the budget, and has to be recouped via taxes. One way or another taxpayers will feel the burden.

We have a debt for other reasons, not the bailouts. The bailouts are coming from the Federal Reserve the companies getting the bailouts will assume the debt to the Federal Reserve, NOT the U.S. Government. The only ignorance here is your ignorance in how the Federal Reserve and a centralized banking system work.

bikezappa wrote: »

Jstas

Thanks for the clarification. You are saying that there will be NO tax increase if the bailout is passed.

I cannot say that nor did I say that. Do not put words in my mouth. The bailouts are not the responsibility of the U.S. tax payer but the funding from the bailout comes from the pot of money the U.S. taxpayer put there to begin with. The company receiving the bailout is responsible for the debt and is responsible for repayment. The U.S. government will get a share of the company that they are bailing out and they will give strict oversight to the bailedout company. Because of that, if the company experiences significant growth because of YOUR TAX DOLLARS that you paid years ago, the Federal Reserve will gain capital also. That means you, the tax payer, benefit from the bailing out the companies.

Your taxes may increase, they may not. I don't know but they shouldn't increase to put the money back in the Federal Reserve. That's the problem of the companies that got bailed out.

bobman1235

Jstas wrote: »

We have a debt for other reasons, not the bailouts. The bailouts are coming from the Federal Reserve the companies getting the bailouts will assume the debt to the Federal Reserve, NOT the U.S. Government. The only ignorance here is your ignorance in how the Federal Reserve and a centralized banking system work.

I love how you jump down everyone's throat for misquoting you in the slightest but then you just make up stuff that you think other people say. Classy.

shack

The treasury could in a matter of hours pay the entire national debt in full. They have the full power to "print" as much money as they care to....they can truly create money. They would simply pay off every treasury instrument holder in full and the debt goes away. Of course the inflation rate would increase several thousand % and the cash would be better for burning as fuel than for purchasing anything. But that is another matter.

If done right a bailout of some sort should have no long term negative impact on taxpayers...certainly less than the impact an implosion of the financial system would create.

Jstas

bobman1235 wrote: »

I love how you jump down everyone's throat for misquoting you in the slightest but then you just make up stuff that you think other people say. Classy.

Care to elaborate? Or better yet, don't. Do me a solid and go take the time to learn about how your government works rather than tell me I'm ignorant because you mistakenly think "that just because the money comes from the reserve means it doesn't come from the taxpayers is very ignorant" and that "We're in a multi-trillion dollar national debt, "extra money" doesn't just sit ununsed, it comes from somewhere, it comes out of the budget, and has to be recouped via taxes. One way or another taxpayers will feel the burden."

Because honestly, you couldn't be more wrong.

Kex

If anyone wants a break from all the flaming going on, here is an interesting read IMO ...
http://www.cnn.com/2008/POLITICS/09/29/miron.bailout/index.html

Jstas

Kex wrote: »

If anyone wants a break from all the flaming going on, here is an interesting read IMO ...
http://www.cnn.com/2008/POLITICS/09/29/miron.bailout/index.html

Don't turn this in to a political discussion.

Counter point:

http://www.cnn.com/2008/POLITICS/09/29/marshall.economy/index.html

wizzy

bikezappa wrote: »

Jstas

Thanks for the clarification. You are saying that there will be NO tax increase if the bailout is passed.

Hopefully not, we need a good tax increase.

We've been funding the war in Iraq on credit cards these last six years. It's time we put up or shut up, if we're going to buy a war we need to pay for it - not borrow for it.

W

Kex

Jstas wrote: »

Don't turn this in to a political discussion.
...

I wasn't trying to, but I think the horse may have already bolted on that score. I thought the argument was more of an economic one (the author is a Harvard Economist, after all, and I'm not saying he's right either!).

bikezappa

Jstas wrote: »

For the last **** time, the bailouts come from the Federal Reserve, NOT the taxpayers. .

Bikezappa Thanks for the clarification. You are saying that there will be NO tax increase if the bailout is passed.

Jstus I cannot say that nor did I say that. Do not put words in my mouth. The bailouts are not the responsibility of the U.S. tax payer but the funding from the bailout comes from the pot of money the U.S. taxpayer put there to begin with.

I have no idea what you are trying to say to me or this group.

It appears to me that you are contradicting yourself.

Joe08867

Jstas, you need to read the bailout agreement. It states at least 20 times how the Government is trying to minimize the cost to the Taxpayer.

I understand the Reserve is the main one reponsible but it will hit all of us also.

brettw22

Jstas wrote: »

But all the aid that we give to other countries for tsunami relief, AIDS epidemic relief, earthquake relief, feminine relief and so on.

I wonder what country we've been turning into a male society.......lol.......

John30_30

shack wrote: »

The treasury could in a matter of hours pay the entire national debt in full. They have the full power to "print" as much money as they care to....they can truly create money. They would simply pay off every treasury instrument holder in full and the debt goes away. Of course the inflation rate would increase several thousand % and the cash would be better for burning as fuel than for purchasing anything. But that is another matter.

If done right a bailout of some sort should have no long term negative impact on taxpayers...certainly less than the impact an implosion of the financial system would create.

True. But now the drums of politicizing are beating full-blast and the regular Joes across the land are about to be convinced to convince their reps that they (we, the regular Joes) need to be able to shoot our own selves in the leg by saying "no bailout".

Is this a great country or what?

Jstas

bikezappa wrote: »

Bikezappa Thanks for the clarification. You are saying that there will be NO tax increase if the bailout is passed.

Jstus I cannot say that nor did I say that. Do not put words in my mouth. The bailouts are not the responsibility of the U.S. tax payer but the funding from the bailout comes from the pot of money the U.S. taxpayer put there to begin with.

I have no idea what you are trying to say to me or this group.

It appears to me that you are contradicting yourself.

Um, no I'm not. The taxpayers put the money in the Federal Reserve and the elected officials (i.e.: Congress) that we have elected to act for us in governing this country are authorized to use that money for whatever is deemed necessary through a vote determining the majority of those in favor or against the policy/bill/law/whatever. If the bailout is necessary and everyone agrees, We, The People, through our elected representatives in Congress LOAN our pile of money to the entity in need of the bailout. The LOAN gets REPAID. If the bailouts are done properly, the taxpeyer should not see any financial burden at all. The operative word here is SHOULD.

And learn how to use the quote button and if you are at least going to try to tear me down through silly fallacies masquerading as arguments about semantics, learn to spell my name correctly.

Joe08867 wrote: »

Jstas, you need to read the bailout agreement. It states at least 20 times how the Government is trying to minimize the cost to the Taxpayer.

I understand the Reserve is the main one reponsible but it will hit all of us also.

You're talking about the bailout bill that didn't pass, right? Because that small fact right there is critically important. It didn't pass. And yes, I did read the actual bill and I did not read what all the news rags were telling me what was in the bill. I read all 119 pages of it. Well, skipped over a few part that were for clerical purposes. But I know what was in the bill and I know what it said needed to happen. That bill didn't pass and I'm kinda glad it didn't pass because it was too hastily put together and tries to give everyone involved a get out of jail free card. That cannot happen. But what is woefully needed right now is an influx of capital to give us time to clean up this mess. That, IMO, needs to happen. As to why, we have gone over it ad nauseum in this thread already.

Jstas

brettw22 wrote: »

I wonder what country we've been turning into a male society.......lol.......

DOH! Stupid auto complete in SeaMonkey!


Was supposed to be famine.

John30_30

Jstas wrote: »

You're talking about the bailout bill that didn't pass, right? Because that small fact right there is critically important. It didn't pass. And yes, I did read the actual bill and I did not read what all the news rags were telling me what was in the bill. I read all 119 pages of it. Well, skipped over a few part that were for clerical purposes. But I know what was in the bill and I know what it said needed to happen. That bill didn't pass and I'm kinda glad it didn't pass because it was too hastily put together and tries to give everyone involved a get out of jail free card. That cannot happen. But what is woefully needed right now is an influx of capital to give us time to clean up this mess. That, IMO, needs to happen. As to why, we have gone over it ad nauseum in this thread already.

Word.

Oh, wait. +1.;)

AsSiMiLaTeD

I'm not an economic expert and do tend to over-simplify things like this, but here's my input...

I think what John is saying is 'technically' correct, in that the bailout funds 'technically' come from the reserve, not the tax payer. However, he also indicates the the tax payers fund the reserve.

A logical person is therefore going to conclude that the bailout funds come from the tax payer, albeit indirectly - the whole "If A=B, and B=C, then A=C" thing...

John is either at a higher level thinking than the rest of us where his thoughts transcend above the level of our logical correlation, has information about a factor unknown to the rest of us that breaks that correlation, or we're just not all on the same page.

John, you can't say something like "the bailouts come from the Federal Reserve, NOT the taxpayers" and then say "Your taxes may increase, they may not" and expect people not to be confused by that. While each statement in it's own vacumn may technically be correct, they simply contradict each other.

As for the point "Well they'll have to pay it back, so it won't cost us anything" that I've heard numerous people make, maybe that's true, but then again maybe it's not. Unless you can guarantee me that all of that debt will be repaid, which you can't, then that in itself is still a risk. As a taxpayer, I'm in effect 'loaning' the banks money on the premise that they may pay it back, so there's still an assumed risk on my end. Ya I know it comes from the Reserve and all that, but it stands to reason that if we take money out of there we're going to have to put it back at some point, and if the banks are unable to repay then that burden is going to fall on the taxpayer.

Plus, I want to know 'how' the banks are going to pay that back, really? You think all those people that welched on their debts are just going to pony up the dough and pay them off. People aren't going to have the funds or motivation to pay off those debts, so how are the banks going to raise money to pay those loans back?

Let's see, I'm a bank, and let's say I have 100 bad loans of 100,000 each, what's that 10 million dollars? So the government loans me 10 million to cover that. Let's say for grins that half of those people pay back their loans because they're good people, and I fork over that 5 million to the government to pay back the loans. That still leaves me owing the government 5 million.

Let's say all the banks effected fall under this scenario. That leaves the government being owed 650 billion, how are the banks going to raise that kind of money? Oh, I know, we'll increase our fees or interest rates for our other customers, we charge everyone a few extra bucks here and there and recoup the money that way. Only problem with that is now we the taxpayers are still the ones paying down those loans...

One way or another it's going to come out of our pockets.

Jstas

Kex wrote: »

I wasn't trying to, but I think the horse may have already bolted on that score. I thought the argument was more of an economic one (the author is a Harvard Economist, after all, and I'm not saying he's right either!).

You mentioned a "Libertarian View" and that's just political flame bait whether you intended it or not.

We have been discussing the federal reserve and the banking system in this country and so far, politics siding with one party or another have been left out. Shack has posted a great deal of good info in this thread as well as others. I would hate to see it shut down over political rhetoric. Just asking to keep political views out of it. I probably could have been nicer about it. Sorry.

Joe08867

Jstas wrote: »

You're talking about the bailout bill that didn't pass, right? Because that small fact right there is critically important. It didn't pass. And yes, I did read the actual bill and I did not read what all the news rags were telling me what was in the bill. I read all 119 pages of it. Well, skipped over a few part that were for clerical purposes. But I know what was in the bill and I know what it said needed to happen. That bill didn't pass and I'm kinda glad it didn't pass because it was too hastily put together and tries to give everyone involved a get out of jail free card. That cannot happen. But what is woefully needed right now is an influx of capital to give us time to clean up this mess. That, IMO, needs to happen. As to why, we have gone over it ad nauseum in this thread already.

I agree they tried to hurry this bill through. The whole idea of a get out of jail free card for them just ticked me off. The bill wasn't ready and I am sure there were tons of holes in it for these corporate guys to get a nice big payout for a job not done well. Let alone what it could possible have done to the economy in the long run.

I read it myself. What a snoozefest that was. I still believe that these corporations made there own bed now they have to sleep in it.

This all had to come to a boil at some point. Housing prices have gone crazy in the last few years. They had to know they were privcing themselves into a corner.

Jstas wrote: »

DOH! Stupid auto complete in SeaMonkey!


Was supposed to be famine.

I hate when that happens.

Jstas

AsSiMiLaTeD wrote: »

Lotsa stuff was here, too much to quote. Click the "View Post" button to see it.

The money in the reserve came from previous taxes collected. It's been there a while.

When we make our budget for the year, it needs to settle out with the amount of taxes we expect to collect. Those taxes go in to the reserve to replenish the money we took out of it to run the country for a year.

If, say, Bear & Sterns takes 70 billion out of the reserve in a bailout, they have to put it back. They won't get the bailout if they cannot put it back. They get sent to a buyout hearing and sold off, like what happened to WaMu. That's a failure and buyout. It preserves the assets but the company is lost.

Bear & Sterns then gets the bailout money because they have enough other assets to continue to grow. The bailout is coming in this case because a risk level for another set of assets they had grew well beyond expectation and became unmanageable. Bear & Sterns cut in to too much capital and lost the financial backing of the other assets they had. This devalues the company and stock prices drop. It makes it hard to recoup capital and raise more because of that. If you can't raise capital, you start losing customers because you aren't returning on investments and people are losing money. They make a run on your bank and essentially you are stripped of capital. No capital, no bank, simple as that.

The bailout comes to inject Bear & Sterns with capital (i.e.: cold, hard cash) to prop them up so they can clean up their mess internally. The other option is to declare bankruptcy. The problem with that is that the investors in the bank lose all assets invested and the bank itself goes to the new owners acquiring the assets through defaulted credit just like the bank forclosing on a home. The investors don't see one red cent though just like a home owner that was foreclosed on. They lose it all.

Now, when you get a bank so large, like, say, Goldman Sachs, where, say 35% of the country, the whole country, has retirement funds and other investments like mortgages tied up and it goes bankrupt, the economic impact that has is staggering. Cleaning up that mess could take decades.

In the long run, the bailout is the better plan.

Now, the bailout shouldn't cost the tax payers money in the future because the bailout will come with conditions that are intended to replenish the reserve as fast as possible. The only excusable way to cost the tax payers money to put the federal reserve back is in an emergency like a war or a natural disaster that wipes a city like New Orleans off the map.

Otherwise, the bailouts are not give aways. They are also not funded by future taxes. Just like if I let you borrow $5 for lunch, I am not going to go to shack and tell him I need $5 more dollars for lunch than usual because I loaned you $5. If I didn't have the money to loan, I shouldn't have lent it to you. Then again, I shouldn't be going to shack for the money at all. I bailed your butt out of a bind, you owe me. Now if I need $5 and you haven't paid me, I might ask shack to spot me until you pay me back but shack can say no. That's why you should be watching the bills that come up and you need to tell your Congressman that is there is a bill that says we need to replenish the reserve because of the bailouts, they should not only vote no but hell no.

bikezappa

[QUOTE=Jstas; I probably could have been nicer about it. Sorry.[/QUOTE]

Ya think?

Joe08867

Jstas wrote:

That's why you should be watching the bills that come up and you need to tell your Congressman that is there is a bill that says we need to replenish the reserve because of the bailouts, they should not only vote no but hell no.

I agree to this point whole heartedly.

I think the bailout could be a great thing, but I don't think it will happen until after the election. The boys in Washington are to afraid of there voters to do it beforehand. I also worry that it will get screwed up and end up hurting us. Sorry for the political view but it is part of the reason the bailout didn't happen.

My only question is how can any of these companies be ready to pay back the "Loan" by the next US budget? And when they don't who gets the bill?

Not trying to stir the pot just asking.

Kex

Jstas wrote: »

You mentioned a "Libertarian View" and that's just political flame bait whether you intended it or not. ...

I was merely quoting the Editor's note from the article:

Editor's note: Jeffrey A. Miron is senior lecturer in economics at Harvard University. A Libertarian, he was one of 166 academic economists who signed a letter to congressional leaders last week opposing the government bailout plan.

Jstas wrote: »

... Just asking to keep political views out of it. ...

No problem at all. I wasn't expressing any political view myself. I still think the article contributes to the discussion and, as I interpreted it, I didn't think it was really attributing blame especially to either party. I apologize if this was perceived as flaming, it was certainly never intended.

Jstas

bikezappa wrote: »

Ya think?

You're really not good with this quote thing.

AsSiMiLaTeD

jstas wrote: »

you're really not good with this quote thing.

lol,

Jstas

Joe08867 wrote: »

I agree to this point whole heartedly.

I think the bailout could be a great thing, but I don't think it will happen until after the election. The boys in Washington are to afraid of there voters to do it beforehand. I also worry that it will get screwed up and end up hurting us. Sorry for the political view but it is part of the reason the bailout didn't happen.

My only question is how can any of these companies be ready to pay back the "Loan" by the next US budget? And when they don't who gets the bill?

Not trying to stir the pot just asking.

The bailout doesn't have to be repaid by the time the next budget rolls around. It's not part of the U.S. Governmental budget. It's a bailout from the Federal reserve. Any money gets paid back by the bank and gets put in to the reserve directly. The only reason that the Government gets involved is because the reserve is made up of taxpayer money. They need to have oversight and they need to have regulation. That is what the bill is for, to outline the terms of the bailout.

As much as it seems the government wastes money, they always account for it. Even if the money is allocated wastefully, they appoint overseers to make sure the money is appropriated and used according to the bill/law that got that money to where it was going in the first place.

Don't think it doesn't happen? My last company got run through the ringer over the whole Coast Guard/Deepwater project. They watch, they know and they will not hesitate to call you out on the mat when it comes to tax payer money. Even if they make a bill saying every first born child will automatically be issued an ostrich buffer and put funding in place to do it. That is a waste of time and money but the tax payers voted for it because their congressional representatives voted for it. So every first born gets an ostrich buffer courtesy of Uncle Sam. As long as they get their buffers, everything is ok, doesn't matter how stupid it is, the bill was passed, the contract was written and put up for bid, the contractor was chosen and hired to build the buffers and money was allocated.

But if someone takes money allocated to buy ostrich buffers and dish them out and uses that money to buy tomato squeezers and give them to disadvantage Swahili children in Hoboken, then some government oversight committee or some independent watchdog will find out and someone will get fined and strung up for it. As silly as it all seems, that is honestly what happens. And I know first hand. 12 years doing government contracting work. I KNOW how that money system works!

That's also why it is important to vote and get the people in office that are going to do the best job they can.

Jstas

Kex wrote: »

I was merely quoting the Editor's note from the article:

Editor's note: Jeffrey A. Miron is senior lecturer in economics at Harvard University. A Libertarian, he was one of 166 academic economists who signed a letter to congressional leaders last week opposing the government bailout plan.


No problem at all. I wasn't expressing any political view myself. I still think the article contributes to the discussion and, as I interpreted it, I didn't think it was really attributing blame especially to either party. I apologize if this was perceived as flaming, it was certainly never intended.

The article is very relevant and I didn't think you were flaming. I didn't want anyone flaming you with political rhetoric. That gets stuff shut down and I hate seeing threads with good info and discussion get shut down over it.