[Politics][Economics][Rant] Failout

[digitaldiscipline]

What we know:
- House of Representatives[1] did not pass the latest version of the bailout plan, at least as of this writing
- $700b figure was essentially pulled out of Secretary Paulson's ass[2]

What I think:
- GOOD. Engage in risky behavior, THERE IS RISK OF FAILURE INVOLVED. There's a fucking news flash. Being insulated from risk in the face of endemic, systemic stupidity and avarice is how we got here in the first place as an economy/society (not to mention why so many otherwise unfit individuals survive to adulthood and procreate, but that's another rant altogether).
- Let the market "correct." If a whole lot of businesses that were poorly-managed and directed fuck the dog, that is, more or less, what they deserve. Apparently, my secondary brick-and-mortar bank (Wachovia) is being bought out by CitiGroup today, because they did some dumb shit. My credit union isn't, because it didn't. Amazing how that works.
- There's a lot of common-sense talk going around by, you know, people who aren't highly-paid Washington or Wall Street suits about "Maybe if you fixed the fairly mundane root of the problem (ie: mortgage fraud, questionable lending practices, sketchy financial instruments, etc), and not the gaudy burning plane crash ass end of it, you might actually do some good."

Of course, that doesn't make for good theater, even if it's the smart fucking thing to do.


From an IM conversation with a colleague:
Him: We're talking about financial collapse that would make the Great Depression look minor by comparison. We would never fully recover. The US would no longer be a financial superpower, the Euro would replace the dollar as the reserve currency for the world. The free market needs regulation. Nobody who knows anything about economics would argue otherwise. This is extreme regulation, but it's necessary because it wasn't regulated enough to begin with.

I'm not sure where to even begin refuting all of those points. Let's just say he and I disagree about as comprehensively on this topic as possible. I am fundamentally ambivalent about the US' remaining as a financial superpower, or the continued use of the USD as the coin of the realm; the Europeans are also, to my understanding, trying to insulate themselves and their market structures from their own misbegotten forays into the shitty mortgage-backed securities and credit default swap insurance businesses.


[1] O HAI, A THIRD OF US ARE LIABLE TO LOSE OUR FUCKING JOBS IN FIVE WEEKS IF WE PISS OFF OUR CONSTITUENTS BY DOING SOMETHING THIS EGREGIOUSLY STUPID. Suddenly, unexpectedly, a synapse fires.

[2] Seriously, I'm not making that shit up about them making that shit up. In fact, some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy. "It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number." Source: http://www.forbes.com/home/2008/09/23/bailout-paulson-congress-biz-beltway-cx_jz_bw_0923bailout.html

Comments

[meiow.livejournal.com]

Eh, I'm kinda with you. I mean, I've got retirement funds in stocks and I'm a homeowner (who bought a house within my means - novel idea, huh?), so all of this will hurt a little if the economy crashes... but if it needs to happen in order to straighten things out, so be it.

It's the baby boomers that are crying the most about this; they're watching their retirement funds seep away, and retirement isn't that far away; a large quantity of them never moved their money to safer investments as they got older, and they can't just "ride it out". Unfortunately, most of the big wigs up in DC are baby boomers.

At least, that's my theory. :)

[ruefullyamused.livejournal.com]

"We just wanted to choose a really large number."

I'm glad they didn't google [ahem, googol] "really large number". The irony would have been lost. Then again, the really large number would have fewer Paulson poopstains on it.

[marchenland.livejournal.com]

"The free market needs regulation."

o.0

Well, now, commie! Heh.

[the_axel]

Not to mention that wasn't regulated enough to begin with is a crock. It was pretty well regulated but McCain [1] and co. voted time & again to remove the regulations.

Those regulations were of course typically added as a response to a previous collapse caused by businesses manipulating the system to line their pockets.

[1] I recall a clip on the Daily Show of Mccain saying in 2003 that he was proud to have voted in favour of deregulation at every opportunity.

[theonebob.livejournal.com]

I'm with you.

[etcet.livejournal.com]

Exactly - trying to postpone the inevitable makes it worse when it finally happens. I was speaking more along the lines of the critique the folks a couple replies further up made - "The free market needs regulation" and the follow-on remarks to that statement.

I seem to recall the Chinese having something to say about living in interesting times.....

[mighty-man.livejournal.com]

I know a lot of people were complaing about how much money was being spent to bail out Sally Mae and Freddie Mac and Co., as well as the brokerage firms and banks and the $700B requested by Paulson & Co., and I'll be the first to admit, that sounds like a heck of a lot of money (moreso considering that I don't have any income and didn't win the $200M Powerball on Saturday).

-- BUT --

Take a hard look at what *not* passing the bill did: a 777 point drop in the stock market. That's the largest single day drop (even surpassing the largest intra-day drop). Let's put that in a different number.

$1.2 trillion.

That's what was lost by the US economy as a whole today.

Hope everyone was happy about that.

[etcet.livejournal.com]

The decrease in value of stock is a relatively artificial means of measuring economic impact. But, yeah, $1.2T is still a big fucking number.

All the same, and not speaking for anyone else, my modest but diversified holdings weathered today's bloodbath fairly well (only down 2.5% with no action taken).

[etcet.livejournal.com]

FAS is a smart guy, and I don't discount that things can start to suck. However, and as Kat1031 pointed out in the comments, my thought process on this is that yesterday's bill was a bad one.

The sense of urgency that has suddenly been injected into the proceedings strikes me as suspicious - this shit has been coming for a long time, what makes this week special?

What I'd like to see is a good proposal, taking into account more viewpoints than Paulson's alone, and including some additional provisions (along the lines of what Kat suggested), get drafted and passed, but while that happens, the guilty companies will get their asses handed to them.

[kambriel.livejournal.com]

I'm definitely of the same mind regarding the market needs a chance to correct itself for a change ~ without massive (externally loaned) financial intervention. If businesses that were practicing ineptly or corruptly go under, that's the natural way of things in what's supposed to be a free market economy.

I questioned early on just where the $700,000,000,000 figure came from... It sounded pretty random (and large enough that some could quite possibly stand to profit significantly from it without much notice), and am glad that part is finally being questioned.