Paulson: Fed Bailout of Bear Stearns Was Right Move

Paulson: Fed Bailout of Bear Stearns Was Right Move

www.cnbc.com

Treasury Secretary Henry Paulson on Sunday defended the Federal Reserve's decision to help rescue Bear Stearns Cos., the teetering Wall Street investment bank. He sidestepped questions about whether other firms are on shaky ground and the possibility of additional interventions of this kind.

(visit the link for the full news article)

Hypocracy at its finest. We can bail out Bear Stearns and big business but small business who needs loans to keep their businesses going are getting nothing of the sort. Besides the small businesses the normal person out there trying to get auto loans, credit card loans, or even some sort of good help on their house is getting nothing of the sort. What little the government has done all the elites talk about how government shouldnt bail out the homeowner they got themselves into things they cant afford.....God this ticks me off so much.

www.cnbc.com
(visit the link for the full news article)

Here is another article also.

blogs.wsj.com...

Four Federal Reserve governors voted unanimously to approve a 28-day secured Fed loan facility to Bear Stearns Friday using a rarely used Depression-era provision of the Federal Reserve Act that normally requires five governors’ approval, Fed officials said.

The Fed normally has seven governors but two seats are currently vacant and one governor was traveling and unavailable to vote.

That stuttering fool Paulson was on Fox News Sunday babbling about the great economy.

His response to every question was to say the economy is resilent and will continue to grow.

It's all over folks.

Originally posted by ColdWater
That stuttering fool Paulson was on Fox News Sunday babbling about the great economy.

His response to every question was to say the economy is resilent and will continue to grow.

It's all over folks.

Yup I saw the interview. Watching him squirm like a worm on a hook and couldnt answer any of the hard questions. Im in the same boat as you this is not looking good at all. Like Schumer says its like what Hoover did in the late 20s.

If one digs & thinks deeper on the subject,

the Fed is using JP Morgan-Chase to get that pound-of-flesh
as Bear Stearns Co's goes to the slaughter house for dissection...


the Fed is using this opportunity (credit/mortgage/derivative/USD/ 'Crunch'
to solidify the economic fortress as a truly fascist (and nationalized) beast.


If one were to look a little past the present 'horizon',
one could see that the Fed Reserve is actually going to 'swap' their
appox. $ 700 billion in Treasury securities for the current mess of
bad mortgage paper & other investment paper that is 'wrecking' the markets.
? Just why would the Fed risk a commitment of one half of their holdings by Swapping $300 billion here/$200 billion there/ $200 more billion within 4 weeks on the supposed 'Bogus' paper which is presently worth about $0.18 on the dollar ?? !!


!! Because the Fed knows.... and is playing the demise of US Treasuries
and the value of the USD...
the Fed is also taking Gold futures Short for June., big time !


at least that's what i read on several well respected sites...


that presently worthless mortgage paper in the forms of CDOs, SIVs, and
Mortgage Debt Obligations... is soon have more staying power than the
toxic paper that is so out of favor at the present... that 'paper' still represents ''tangible assets" as opposed to a devalued (.35 cent) dollars 'promise to pay'... No wonder Greenspan told the finance meeting in Dubai (last week) to un-Peg the (petro) dollar to Oil

===am i reading way too much... between the lines ?? ===
read 'em & weep, is my reply

I am all for a bailout of Bear Stearns, provided the money comes with strings attached. As a condition of Bear Stearns being bailed out, it must agree to abide by certain conditions. For starters, executive compensation packages must be slashed. Bear Stearns cannot afford to pay its executives tens of millions of dollars. If the executives deserved the high pay, the company would not need to ask for a bailout. Second,
Bear Stearns must give discounted loans to businesses that benefit the common good. For example, they must give cheap loans to entrepeneurs who are starting alternative energy businesses. Finally, they must give back a significant fraction of their profits to schools, veterans hospitals and the like. By no means is this list exhaustive, and I am pretty sure you can come up with better conditions.

I know the fiscal conservatives out there may respond that I am putting too much restrictions on Bear Stearns. My answer is simple this, if Bear Stearns wants to live by the rules of lesseiz faire capitalism, it would not allow the government to interfere with its natural demise.

Hot Pink and St Udio if you really want to solve the problems it isnt through bailouts like what is going to happen with bear stearns. First off to add to St Udio JP Morgan was one of the peeps who started the fed so it doesnt surprise me they are going through them for the bailout.

Hot Pink the money isnt going for the better good. These loans are being used to continue the day to day operations like paying the execs. I understand what you are saying but this money is not going for good and when Bear Stearns get bought out by Chase which they will mark my words all the execs with Bear will get huge amounts of money for doing nothing but kill the business...kinda like what happen with citi. If you really want to fix this problem this is what you need to do..

first thing is first the government needs to admit there is a problem. We cant even get our president to admit we are in some serious trouble.

Second we need to let the big brokerages and banks go under that made the bad bets. We are spending and going to spend way more money than we have to actually bail these guys out (Like Bear Sterns). The point of a recession is to "cleanse the system" as all the wall street boys say. How you gonna cleanse the system if you keep bailing out these people. Ultimately the tax payers will get stuck with the bill of bailing these guys out and that is just not right at all considering the government doesnt want to give any bailouts to homeowners and small businesses.

Third let the banks work with homeowners without worries of lawsuits on either side to lower the principal balance of houses in trouble to keep the people in the houses. Yes its going to be a loss for the bank but they will lose a hell of a lot more if they dont keep people in houses. This will create a bottom because we will now now what these houses are valued at and can move forward.

Finally we need to fire the fed. Get rid of them and go to gold or silver backed currency. The monetary system we are in is destined to fail and will bring down our whole country with it. If we have money backed by gold and money that is issued by the government and not a private bank we can only spend what money we have backed in gold. There would be no more reason to tax. If we need more money we need to get more gold which would keep the government from spending all sorts of money that we dont have. No taxes keeps money in peoples pockets which can grow the economy and sustain growth instead of having recessions. If you have a strong currency and no debt and hi GDP there is no reason that we should have a recession. The fact is people are working harder and harder and their incomes are going no where while the price of everything is going up. If we were backed by gold at this point we would have no isses because gold has kept up with the inflation for the most part.

reply to post by mybigunit


I am fully aware that the money is not going towards the better good and is just a corporate welfare check. I am just saying that in the ideal world (which we certainly do not live in) Bear Stearns bailout should come with strings attached.

I agree that people that make bad financial decisions should pay the consequences for their decisions. This applies to individuals who got into goofy mortgages and banks that issued the goofy mortgages. The common good is not always served by having a pure "free market" approach to every situation. Sometimes the "free market" fails and needs a helpful nudge or slap down from the federal government.

Here, the public good might be served by taking a partial "free market" approach where Bear Sterns is saved from crashing to the ground, but nevertheless has to suffer the consequences of its behavior and is punished. Perhaps it should be given a loan with several strings attached which could include severely reduced compensation for executives that allowed Bear Sterns to get into the mess it is in.

Originally posted by mybigunit


Third let the banks work with homeowners without worries of lawsuits on either side to lower the principal balance of houses in trouble to keep the people in the houses. Yes its going to be a loss for the bank but they will lose a hell of a lot more if they dont keep people in houses. This will create a bottom because we will now now what these houses are valued at and can move forward.

&

Finally we need to fire the fed. Get rid of them and go to gold or silver backed currency. The monetary system we are in is destined to fail and will bring down our whole country with it. If we have money backed by gold and money that is issued by the government and not a private bank we can only spend what money we have backed in gold. There would be no more reason to tax. If we need more money we need to get more gold which would keep the government from spending all sorts of money that we dont have.
If we were backed by gold at this point we would have no isses because gold has kept up with the inflation for the most part.

the faulty reason is that Both the Lender And Borrower
knew the sales price to be inflated/exaggerated...

now, if you could accept a sliding scale of value-to-payment rate,
that might make sense to me...
although, just who? would be the agreed upon, unbiased appraisor??
all those Yahoos that gave exaggerated Appriasal values before are still in the system,
The county governments liked these overvalued appraisals & the agents who made them... the result was more monies from tax revenues on overvalued homes.



As far as going back to Gold-Silver... i'm for an asset based money system.

but the only ones that practice that sort of thing now-a-days is the middle east/gulf cooperation states....
Which aso seems to center on Sharia banking rules...
something that would be earthshaking to the present status quo in the fiat,
debt, and usury financial models played out by the western banking cabal
led by the elites at 'central banks'

Originally posted by St Udio



As far as going back to Gold-Silver... i'm for an asset based money system.

but the only ones that practice that sort of thing now-a-days is the middle east/gulf cooperation states....
Which aso seems to center on Sharia banking rules...
something that would be earthshaking to the present status quo in the fiat,
debt, and usury financial models played out by the western banking cabal
led by the elites at 'central banks'

The same middle eastern countries that have all the money right now and buying our companies and debt? Hard money is the way to go and there is no ifs ands or buts about it.

I feel like Paulson Jr. is contributing to the destruction of our monetary policy. One would think there is a reason Paulson is for bailing out big banks, what was his old job again?

Yahoo/CNBC posts J.P.Morgan buys Bear Sterns for $2 share. Not $20, but $2.

Fed lowers overnite rate .25 to 3.25.

Poof $320 billion in leveraged assests

Originally posted by mybigunit


The same middle eastern countries that have all the money right now and buying our companies and debt? Hard money is the way to go and there is no ifs ands or buts about it.

These (ally) nations are doing their buying with the tons of petro-dollars
they have an over abundance of,,, and through a 'Soverign Wealth Fund' vehicle of investment.

they are not being magnaminious, they are being pragmatic and
employing the idea of 'recipricocity'..

IOW, if the USA needs a 'bail-out' they will help (for a couple of billion in arms sales)


your take that the M.E. & Gulf States are actually evaluating the economic savvy of these deals, and buying USA crud.... is something along a naive stand....


Arms are being twisted !! you just don't want to acknowledge it !

Incredible, it is ok to bail this private entities out but when it comes to the American people in trouble because their corrupted practices nobody comes to the rescue.

This nation is indeed run by corporate power.

Originally posted by ColdWater
Yahoo/CNBC posts J.P.Morgan buys Bear Sterns for $2 share. Not $20, but $2.

timely report/post

i only heard the news at 8:01 pm EST



which only reinforces my conjecture that the Fed Reserve itself
is going to buy up all the ~presently bad mortgage paper~
from its member banks,,,,
think 'JPM' here who acquired 'BSC' crud at next-to-nothing...
(right on the eve of Asian & then European Market openings....)


and then think the Fed. swapping that bad paper which the now super fat 'JPM' (with BSC assets) owns outright, then swapping with the Feds. $700 billion of USA Treasury Bonds..........

what rational is there in that sort of deal ???

swapping those 'AAA' rated Treasuries for 'ccc' or less mortgage bonds ??


i told youse the deal, earlier in a related thread....

it seems there is no end to the tactics being played out on the unsuspecting

All they had was the building and now it full of holes.

Time to demolish another worthless building.

Buildings devalue not increase.


ED: 1/4 price sale on the BS building, 1/4 was most likely the value
on homes they sold on rigged mortgages.

Policy bites back.



[edit on 3/17/2008 by TeslaandLyne]