Massive financial bailout fails in the House

The logic of the bailout reminds me of a simpsons episode where they've dug themselves into a hole and someone asks how they get out. Homer says "lets dig ourselves out!".

I think the US is headed for an inevitable depression.. but taking even more money off taxpayers is just going to make it hit harder; can't get blood from a rock. The damage to the US economy has been done.. bush just doesn't want to be known as the one who could have prevented it.

[edit on 30-9-2008 by riley]

reply to post by riley


It's not just the US, it's GLOBAL. The world really doesn't rely on the US for it's success or failure, many countries that use fractional reserve banking and are part of the BASEL II accords are in the EXACT SAME situation.

reply to post by nfotech


It's hard to make some people understand.

Perhaps the best layman way of making it clear is simply by stating that, for each homeowner or former homeowner that would have say, $200,000 in equity by which to borrow from (read: overextend themselves by, or OVERLEVERAGE themselves), these bankers derivatives would OVERLEVERAGE these same property holdings or collaterized debt against SEVERAL times, all the while maintaining that it was safe and insured against default.

So, they leveraged 200,000 and 200,000 and 200,000 and 200,000 against the same property. Insured because they always know that somehow, they will get paid. Until they dont.

Now, too many default, and, whoops we were only kidding about being insured ENOUGH against default (the Tokyo company who REALLY owns your property gets wise to it) and the investor wants their money back.

"S__t"..........


AB1

reply to post by nfotech


Not only commercial mortgages but also the silent shark of CDS

So far, many of the banks that bought the swaps from the hedge funds have quietly eaten the loss, market insiders with knowledge of the industry said. The banks and others in the markets do not want to arouse the attention of regulators or the bankruptcy court, which could issue adverse rulings that will constrict the lucrative market, people familiar with their strategy said.

www.nysun.com...

More on CDS

In just over a decade these privately traded derivatives contracts have ballooned from nothing into a $54.6 trillion market. CDS are the fastest-growing major type of financial derivatives. More important, they've played a critical role in the unfolding financial crisis. First, by ostensibly providing "insurance" on risky mortgage bonds, they encouraged and enabled reckless behavior during the housing bubble.

money.cnn.com...


Watch that after they get the 700 billion for the mortgages, they going to come back and ask compensetion for their losses in the CDS market, and it would be all gloom and doom all over again.

[edit on 30-9-2008 by Bunch]

[edit on 30-9-2008 by Bunch]

Dear Congress,

Please, just stay home.

With all of your meddling, posturing and political theater yesterday, the stock market fell 777 points. Today, while you are on holiday, the market is back up 500. The dollar is surging.

Do you get the message? A free market does not need your intervention to function.

Please, do the country a favor. Stop your incessant meddling! Just let the market work!

I read this somewhere and thought i'd copy n paste it.

Look, this problem is squarely on the shoulders of the democrats. Period.
Back in 2004 when hearing were held regarding problems with fannie mae and freddie, the republicans were pointing out the problems and asking for some regulation and solutions. The Dem's ignored the evidence or perhaps could not comprehend the problem and stated that there was no problem.

Here is a video which proves it. It has high profile dems like Maxine Waters and Barney Frank stating that nothing was wrong and everything is just fine with no problems. Other dem's also stated the same thing, like Schumer, but he is not in this clip.

Let's not forget Obama's financial advisor, Frank Raines, who also stated there is no problem and everything is fine and he is in this video. Pathetic!!

Click here for YouTube video

[edit on 9/30/2008 by WhatTheory]

reply to post by WhatTheory


Well,

Frankly, unless back in 2004 you knew just as well then, as you do now, that financial breakdown was imminent, why would they have assumed any differently than you?

Not to mention 2004? This problem has it's roots SO MUCH FURTHER back than 2004 it's not even funny. So, by professing that it "rests squarely on the DEMS shoulders" based on comments that took place IN 2004 is exaggerated at best, and irresponsible at worst.

AB1

reply to post by WhatTheory


Democrats, Republicans... WHO CARES!!!! Seriously, stop trying to place blame, its everyone's fault. Blame doesnt fix anything... Letting the markets fix themselves will.

Originally posted by alphabetaone
Well,

Frankly, unless back in 2004 you knew just as well then, as you do now, that financial breakdown was imminent, why would they have assumed any differently than you?

Huh?
This was a hearing on the potential problem because the regulator was raising red flags. Apparently, the dem's ignored the facts or just could not understand the problem. Funny, only the dem's did not see the problem. It's because they were pushing for the loans which should not have been made in the first place. They wanted poor people who could not pay a mortgage to be able to buy a house by offering loans with no money down and no income verification. Doesn't take a rocket scientist to figure out what went wrong.

reply to post by WhatTheory


This is a problem of sheer greed and you can blame both parties for been a part of it. The free market is broken, and has been for a while now.

We got to let the free market be free again.

Originally posted by redhatty
reply to post by riley

 

It's not just the US, it's GLOBAL. The world really doesn't rely on the US for it's success or failure, many countries that use fractional reserve banking and are part of the BASEL II accords are in the EXACT SAME situation.

I realise this. Many other countries have stricter regulations in regard to how banks conduct themselves.. US banks were alloud to get out of control.
Aus was headed in the same direction a couple of years ago with unpayable mortgages so the government shortened the leash. This made it harder for banks to bully poor people into loans they could never afford and so it slowed down the housing market.. but of course this created a massive rental crisis instead. The rest of the world will definently feel the pain of this (as recession) but the US will get the bulk of the impact. I'm really surprised bush hasn't mentioned Iraq though when mentioning this bailout.. seems the most obvious place to start cutting costs.

[edit on 30-9-2008 by riley]

Originally posted by XTexan
Democrats, Republicans... WHO CARES!!!! Seriously, stop trying to place blame, its everyone's fault.

It's not eveyone's fault. There are only a select few who are at fault.

Blame doesnt fix anything...

Sure it does. If you don't blame the correct people, then the same people who caused the problem to begin with will do it again. These same people who caused the problem are now trying to fix the problem by giving themselves and their friends money. Just wow!

Letting the markets fix themselves will.

Yes, we should let the markets fix themselves.

reply to post by WhatTheory


No doubt there are some democrats involved in the run up to this crisis but the blame is all over the political spectrum.

These people are not really on opposing teams, not at all and especially when they are busy defrauding the taxpayers. Going back to the HUD embezzlement under Reagan, Carter and Bush 1, to the Fannie M and Freddy M scams under Bush II - over and over again we find out from former insiders what the same is and why these "bail outs" are needed.

In this latest case it just so happens they have quite a few crimes to cover up in a variety of places. In brief and with very little detail - they would take 1000 real mortgages and package them into a mortgage backed security instrument with an added 1000 "fake" mortgages. The fraudulent profits were siphoned off to be used for bribes, many of which went to these same Congresspersons and Presidential campaigns.

The truth is there is no sudden emergency other than the various investigations underway by a variety of enforcement apparatus. The biggest of the Wall Street financiers are better served via the crisis, a bail out and the artificial scarcity of credit in order to drive down the value of real assets.

You've got to admit, when they go criminal they go all out. They plan to use this to establish the pretext for the NAU financial system, to dump all the evidence in the form of these "distressed mortgage based securities" and profit handsomely in the process via free money from the taxpayers and cheap assets to be bought with said free money. If we approve the bailout in it's requested form the final cost will be infinite.

We need to demand the better solutions, long term change and support the criminal investigations. Voting the incumbents out of office in favor of non-politician candidates would also be a very, very good idea if you value freedom.

reply to post by nfotech


Thank you. This is exactly what needs to be said. This guy before you is trying to push the blame on several tax paying citizens. I for one do not understand his stance on this. There are innocent people out there who may be faced with a dilemma and they had nothing to do with any of these faulty mortgages. Paulson can suck it, him and his want to be Dictatorship.

reply to post by WhatTheory


Granted, not all the members of both parties are, but the blame is something that is most definately bipartisan. What I meant was, it does no good to blame one party or the other... both sides have shady characters involved here, and if we don't stop the next vote on the bailout bill, we'll probably never know.

That should be our main concern is stopping that bill, then we can move on to the arrests.

reply to post by XTexan


I admire your desire to stop that bill. However, the bill is unstoppable. What happened the other day was a fluke. People voted NO to look after their own self interest because majority of them are up for election. They know the people do not want this but they see things differently. They will succumb to the media and pass it. They don't want to be blamed if the economy fails because they failed to pass this. More than likely you will see both chambers pass their bills and the President will sign.

Might as well get use to it.

Originally posted by XTexan
That should be our main concern is stopping that bill, then we can move on to the arrests.

As much as I agree, there is also a problem with that plan. You see, Fiscal Year 2009 begins tomorrow. The BASEL II accords go into effect for the US tomorrow. The credit freeze has already begun because BASEL II compliant banks / financial institutions in the rest of the world have already stopped extending credit to the US banks who are not BASEL II compliant and it was clear that they had no way of being so by tomorrow.

In fact, the ONLY BASEL II compliant bank / financial institution in the US is Goldman Sachs. So right now, that is the only bank that can have international credit, but by the BASEL II accord, it can only extend credit to other BASEL II compliant banks / Fin Inst.

Something needs to be done FAST, that gets our banks to BASEL II compliance or we will not be able to buy crude oil for the refineries, parts for the foreign auto plants, cheep stuff from China and Taiwan, etc.

We won't have OIL or foreign goods, because all that trade runs on credit. Companies that borrow monthly or quarterly to meet payroll won't be able to borrow the funds.

Either we become BASEL II compliant somehow, some way, or we convince all the countries that are part of the accord to drop the agreement. Until then, we will just see things deteriorate rapidly (like the gas crisis in 7 or 10 states now).

While I fully agree that the markets should be allowed to correct themselves, whatever fix we have needs to also make sure that we get our countries banks / Fin Inst. books in order (BASEL II compliance) or close the doors to them, let FDIC do it's job for people's $$ and prosecute the thieves.

If we can't trade with the world, we WILL become a target to someone.

reply to post by mybigunit
Today's news indicates that there will be some serious fallout for at least a small number of the power elite.

Fannie, Freddie disclose subpoenas, investigations
By ALAN ZIBEL, AP Business Writer Tue Sep 30, 5:33 AM ET
WASHINGTON - Adding to their woes, mortgage finance giants Fannie Mae and Freddie Mac are facing a federal grand jury investigation into their accounting practices.
The mortgage finance companies said Monday that a federal grand jury in New York is investigating accounting, disclosure and corporate governance issues at Washington-based Fannie and McLean, Va.-based Freddie.

Fannie and Freddie said they received subpoenas Friday from the U.S. Attorney's office in Manhattan as well as requests from the Securities and Exchange Commission that they preserve documents. Fannie Mae and Freddie Mac were taken over by the government earlier this month as their mounting defaults and foreclosures threatened the entire mortgage market.

news.yahoo.com...

I've been to Downsize DC.org...They make it real easy to email my government "representatives." In their list of campaigns, they include a "Thank & Spank" letter that goes directly to the correct Rep's office & in this particular case I unfortunately had to make it a "spank" letter.
Of the 5 Reps for my State, 2 of them (both Democrats) voted for the bailout...Unfortunately, the Rep for my particular District had to be spanked. All of the others are not of my District, so it would be pointless to write to them also.

Here's what my letter said, word-for-word:

I'm glad the bailout bill failed to pass.

However I am disappointed that you voted to pass it. I voted for you before, but I can guarantee that I won't vote for anyone who betrays his Office of Public Trust like this. Within the neighborhood of 80% of the general population against the bailout & the House Vote so close (only about a dozen votes), one must wonder where your loyalties truly lie.

Any bailout at all is only going to sink the Federal Government deeper into already-insolvable debt & drag the rest of the People along with it. Any bailout at all will only delay the drop in the economy because it's already public knowledge that the Unconstitutional Federal Reserve Bank *deliberately engineers* a boom-n-bust economy by manipulating interest rates. Any bailout at all will only serve to reward bad business ethics (really just one big Ponzi Scam) & worsen an already inevitable drop in the economy; By delaying it, it will hit harder & last longer before any recovery can begin.

We are nowhere near the same kind of edge that brought on the Great Depression Era & every time that Pres. Bush has spread the fear of "doom & gloom if we don't act NOW!" where has that brought us? It's so far brought us to the edge of tyrannical fascism under Private Banking Interests & Corporate Special Interests. So where are your loyalties? With the People & your Oath of Office or with the widespread fraudulent practices in business & a fear-mongering Executive Branch?

The only real "fix" to this debt-based economy using the Federal Reserve Notes (nothing more than Corporate Scrip anyway) is to dissolve the Federal Reserve Bank, get gold/silver back as *real money* & bring the real criminals to justice for perpetuating the fraud (as *accomplices* after the fact) since the 1913 Federal Reserve Act.

Originally posted by grimreaper797
HISTORY shows us that letting the system collapse, is always a bad decision.

American history shows different: Check out how this nation was originally founded to see a significant break in the cycles of history in these excerpts from the Declaration of Independence.

When in the Course of human events it becomes necessary for one people to dissolve the political bands which have connected them with another and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature's God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

Well, the People flooding Congress with mail & phone calls in the vicinity of 70+% (a rough average based on a number of different polls I've seen published) of the population amounts to our Declaration that they've been doing us wrong & it's now time for them to face up to the music & start being held accountable for their actions...Either shape up or ship out.

That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government,

They know that their jobs & their "standard operating procedures" against the Supreme Law of the Land are all on the line now.

And here's the real root of the Peoples' message that they cannot ignore anymore (bold emphasis added):

Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.

Reading the Declaration even further, you'll find that many of the grievances listed there have been coming to pass again & the very same spirit that prompted the Founding Forefathers is taking root today. They stood by each other against a common enemy & we're preparing to do so again...today if necessary.

I also call back to my own memory of the Oath of Office I took when I joined the military: To uphold the Constitution & defend my country against all enemies foreign AND domestic! Imagine the shock to my mind when I first learned the truth that the enemies of my country started with the banking system & infiltrated into the very government...Decades before I was even born! Even though I've served my time & discharged the legal obligations of that Oath almost 20 years ago, I still take it seriously...Because I'm an American! Apparently, myself & many more People are taking the foundations of this nation more seriously than the talking heads that the banking industries hired to deliberatelyrun our country into the ground. This is the same level of loyalty that is required by Constitutional Oath of Office & legally binding upon all who assume any Office of Public Trust.

Why do you think the banks & the government are doing this? Power & control: The Founding Principles of the USA are a mortal threat to their age-old lust for power & control over the whole planet.

Originally posted by grimreaper797
Now, NOBODY is saying this is a solution. This 700 billion dollar bill...not a solution.

Well, the start of a real solution is what I outlined in my re-quote of the letter I sent to my Rep...The Federal Reserve is the root of the cancer, cut it out. Restore Constitutional limits to both the economy (backed with gold/silver, not corporate scrip FRN's) & the government itself. So far, the government has only used one solution to any problem...Throw more public debt at it. This is what's run our country down so far in the first place, so you & I at least agree that a "bailout" is not any solution.

Originally posted by grimreaper797
Start naming off every american citizen that took out a loan they had no means to pay back. They are, after all, the ones who willingly went into the contracts.

And why don't you start naming everybody who did pay off their loans, or never signed onto those bad contracts, but will still have to pay for it with higher taxes? Make no mistake, it will mean higher taxes to fund an already-insolvent federal deficit, even before any "bailout" gets plopped on top of it. I don't ask that people never make any mistakes...After all, making mistakes is a part of human nature. No one can learn from mistakes until they first make them. But I do ask that people pay for the mistakes they make, without getting the government to put a gun to my head to my head to help them.

I've just expressed my true loyalties. How about you express yours? As if you haven't already been doing so in this thread...

Originally posted by mybigunit
Its the same thing as scaring the people into Iraq, scaring the people to sign the patriot act, and now they are trying to scare people into signing this bailout. Make no mistake the government has seen it work a few times so why not try it some more?

So, it's the government that's really promoting all of the scare-tactics? How about a look at this word from Merriam-Wbster's Dictionary:

Main Entry: ter·ror·ism
Pronunciation: \ˈter-ər-ˌi-zəm\
Function: noun
Date: 1795

: the systematic use of terror especially as a means of coercion
— ter·ror·ist \-ər-ist\ adjective or noun
— ter·ror·is·tic \ˌter-ər-ˈis-tik\ adjective

So, Mr. President "Gung-Ho-War-Against-Terrorism, Doom-n-Gloom-Gotta-Act-Now!" Bush, where's the real terrorist threat in the USA? Can we say that it starts in the government, Wall Street & the Fed Res?

Originally posted by ModernAcademia
Dear Congress,
Please, just stay home.
With all of your meddling, posturing and political theater yesterday, the stock market fell 777 points. Today, while you are on holiday, the market is back up 500. The dollar is surging.
Do you get the message? A free market does not need your intervention to function.
Please, do the country a favor. Stop your incessant meddling! Just let the market work!

I read this somewhere and thought i'd copy n paste it.

Hmmm...Would this quote do about as well?
"The mystery of government is not how Washington works, but how to make it stop." -- P. J. O'Rourke, Source: Parliament of Whores, 1991