An Argument for the Bailout

[vote4ronpauleeze]

Before I begin, I would like to draw attention to Dr. Paul's stance on earmarks...

As I'm sure many of you are well aware, Dr. Paul does frequently interject earmarks into bills on the behalf of his congressional district. While this ostensibly is anti-libertarian and seemingly against small government, it should be noted that the addition of earmarks does not directly increase spending. Earmarks, simply, direct pre-authorized federal funds towards specific projects, and if those funds are not utilized in the earmark process then they are spent at the discretion of the executive branch. Therefore, we can conclude that this philosophy states that taxpayers already have a vested interest in these funds, so they might as well reap the benefit.

As for how this philosophy pertains to the current financial situation, one could argue that the taxpayers already have a vested interest in the current plight of our system through the malfeasance and incompetence of the Fed. Aided by artificially low interest rates, banks were able to lend more money therefore creating a bubble through malinvestment and an excess of cheap money. Suffice it to say, the taxpayers have already suffered a great deal from this mess through the loss of equity in homes, the loss of many jobs, and the loss of stockholder's equity. These problems will continue to linger for sometime and will be a further detriment to our country, resulting in the possibility of far greater losses and the potential for a recession and possibly depression.

Now, similarly to the sunk cost philosophy of defense to Dr. Paul's earmarks, I would argue that the taxpayers have already been on the hook for this mess and deserve the best bang for their buck that they can get, before more damage occurs. The potential economic impact of loss will far exceed the estimated $700 billion proposal, since a collapse of our financial markets will eliminate a great deal of jobs and further depress economic growth.

Further, the money being spent on the "bailout" will acquire these illiquid assets at such a discount, that a profit can be realized after these debt obligations are seen to maturity. There is a very good chance that this scenario plays out, but in the event that it does not, $700 billion being spent will end up costing taxpayers a lot less than the impact already suffered and the future impact that has yet to be seen.

I know that this theory was long, but I believe that it has the same underlying concept that Dr. Paul has towards the use of earmarks.

[robinsong]

The bailout is bad, yes. But it'll be a slower process than if there's no bailout. That's good for us! That buys us time to pay off our credit cards, accumulate some more wages, sell more of our junk on ebay, and turn more and more of our trash cash into gold and silver.

without the bailout, the problems would happen a lot faster, and we wouldn't have as much time to get rid of our personal debts to get ready.

Jenny

[vote4ronpauleeze]

The bailout is bad, yes. But it'll be a slower process than if there's no bailout. That's good for us! That buys us time to pay off our credit cards, accumulate some more wages, sell more of our junk on ebay, and turn more and more of our trash cash into gold and silver.

without the bailout, the problems would happen a lot faster, and we wouldn't have as much time to get rid of our personal debts to get ready.

Jenny

The difference between the two isn't only time; it is also the severity of the impact. When fears hits an economy, you are exposed to the possibility of runs on the bank, the potential for many good businesses to fail, and a substantial increase in unemployment.

But you're right though, it would certainly give the taxpayer a better chance to deal with this mess.

[Dr.3D]

What makes you think the plan will change anything? From all appearances, it may only temporarily postpone the inevitable economic collapse. What it will do for sure, is to cause inflation. If we all want to pay more for everything we buy in the future, then we should hope for the plan to pass. If the plan passes, then the cost of living will go up and we will still have the same problem only postponed to a slightly later date.

[Ozwest]

What makes you think the plan will change anything? From all appearances, it may only temporarily postpone the inevitable economic collapse. What it will do for sure, is to cause inflation. If we all want to pay more for everything we buy in the future, then we should hope for the plan to pass. If the plan passes, then the cost of living will go up and we will still have the same problem only postponed to a slightly later date.

Bush and Cheney have $#@!ed you guys.

Why did you elect them for two terms?

Wankers.

[Bruno]

Bush and Cheney have $#@!ed you guys.

Why did you elect them for two terms?

Wankers.

Because Kerry failed miserably at opposing them. We only have two choices in our flawed political system.

[theoakman]

Before I begin, I would like to draw attention to Dr. Paul's stance on earmarks...

As I'm sure many of you are well aware, Dr. Paul does frequently interject earmarks into bills on the behalf of his congressional district. While this ostensibly is anti-libertarian and seemingly against small government, it should be noted that the addition of earmarks does not directly increase spending. Earmarks, simply, direct pre-authorized federal funds towards specific projects, and if those funds are not utilized in the earmark process then they are spent at the discretion of the executive branch. Therefore, we can conclude that this philosophy states that taxpayers already have a vested interest in these funds, so they might as well reap the benefit.

As for how this philosophy pertains to the current financial situation, one could argue that the taxpayers already have a vested interest in the current plight of our system through the malfeasance and incompetence of the Fed. Aided by artificially low interest rates, banks were able to lend more money therefore creating a bubble through malinvestment and an excess of cheap money. Suffice it to say, the taxpayers have already suffered a great deal from this mess through the loss of equity in homes, the loss of many jobs, and the loss of stockholder's equity. These problems will continue to linger for sometime and will be a further detriment to our country, resulting in the possibility of far greater losses and the potential for a recession and possibly depression.

Now, similarly to the sunk cost philosophy of defense to Dr. Paul's earmarks, I would argue that the taxpayers have already been on the hook for this mess and deserve the best bang for their buck that they can get, before more damage occurs. The potential economic impact of loss will far exceed the estimated $700 billion proposal, since a collapse of our financial markets will eliminate a great deal of jobs and further depress economic growth.

Further, the money being spent on the "bailout" will acquire these illiquid assets at such a discount, that a profit can be realized after these debt obligations are seen to maturity. There is a very good chance that this scenario plays out, but in the event that it does not, $700 billion being spent will end up costing taxpayers a lot less than the impact already suffered and the future impact that has yet to be seen.

I know that this theory was long, but I believe that it has the same underlying concept that Dr. Paul has towards the use of earmarks.

pure BS. If those assets were worth more than their book value, than their is no crisis at all, and therefore, no need for a bailout. Like Dr. Paul said, they aren't illiquid. Price them at a dollar and see how fast they go. They are OVERPRICED.

[theoakman]

The bailout is bad, yes. But it'll be a slower process than if there's no bailout. That's good for us! That buys us time to pay off our credit cards, accumulate some more wages, sell more of our junk on ebay, and turn more and more of our trash cash into gold and silver.

without the bailout, the problems would happen a lot faster, and we wouldn't have as much time to get rid of our personal debts to get ready.

Jenny

so, you can sell your junk, and manage to save up a little more money? That's short sighted thinking. We trash our currency so we can grab a little more money before the shtf? What about 10 years from now? Everyone will look back in hindsight and wish they hadn't done that.

[Dr.3D]

Because Kerry failed miserably at opposing them. We only have two choices in our flawed political system.

Sometimes it is best to just ignore Ozwest when he insults us like that.
He thinks it is fun to sit on the other side of the globe and point his finger at us.

As far as I am concerned, he doesn't have a clue as to how to solve the problem and just likes to cause trouble on these forums by interjecting silly remarks like that one.

[vote4ronpauleeze]

What makes you think the plan will change anything? From all appearances, it may only temporarily postpone the inevitable economic collapse. What it will do for sure, is to cause inflation. If we all want to pay more for everything we buy in the future, then we should hope for the plan to pass. If the plan passes, then the cost of living will go up and we will still have the same problem only postponed to a slightly later date.

You've got to look at this from a risk-reward analysis. Moderate inflation will look like a victory next to the collapse of the financial system. If our investment banks and money markets fail, then we're in a depression. No doubt about it.

You can kiss goodbye any small business out there, a quarter of our jobs will be lost, and purchasing will come to a halt.... Let me be clear, I hate government intervention and am 99.99% against it. However, it is the GOVERNMENT that put us in this mess and the FED that acted irresponsibly, so I think it is owed to the people that this thing is fixed before more suffering occurs.

[vote4ronpauleeze]

pure BS. If those assets were worth more than their book value, than their is no crisis at all, and therefore, no need for a bailout. Like Dr. Paul said, they aren't illiquid. Price them at a dollar and see how fast they go. They are OVERPRICED.

They're illiquid to the point that if a business wants to remain a going concern, they cannot dispose of them at that price...

Sure, these banks COULD sell off their portfolios, but not for a price that would keep them in business. I mean, I know they've made some dumb decisions, but they're not masochists.

[Dr.3D]

You've got to look at this from a risk-reward analysis. Moderate inflation will look like a victory next to the collapse of the financial system. If our investment banks and money markets fail, then we're in a depression. No doubt about it.

You can kiss goodbye any small business out there, a quarter of our jobs will be lost, and purchasing will come to a halt.... Let me be clear, I hate government intervention and am 99.99% against it. However, it is the GOVERNMENT that put us in this mess and the FED that acted irresponsibly, so I think it is owed to the people that this thing is fixed before more suffering occurs.

I guess you don't understand, there is going to be a collapse of the financial system anyway. You can't treat the symptom of inflation with more inflation.

[Ozwest]

Sometimes it is best to just ignore Ozwest when he insults us like that.
He thinks it is fun to sit on the other side of the globe and point his finger at us.

As far as I am concerned, he doesn't have a clue as to how to solve the problem and just likes to cause trouble on these forums by interjecting silly remarks like that one.

Get $#@!ed.

It's my 50'th Birthday today.

I spoke to my younger U.S. bro, and he is almost as successful as I am.

I am a businessman. He is a CPA.

The penny is starting to drop...

[Mahkato]

Why did you elect them for two terms?

The ones we elected are only part of the problem. Much of our government is unelected. And even if we had elected Kerry/Gore/etc. we'd still be in the same situation.

[vote4ronpauleeze]

I guess you don't understand, there is going to be a collapse of the financial system anyway. You can't treat the symptom of inflation with more inflation.

We're not treating inflation right now, so it's not "treating inflation with more inflation".

Yes, we've experienced inflation, but inflation in of itself is not responsible for the lack of credit, the damage to the housing market, and the demise of many financial institutions.

[Dr.3D]

Get $#@!ed.

Okay kid, was that a proposal?

[Ozwest]

The ones we elected are only part of the problem. Much of our government is unelected. And even if we had elected Kerry/Gore/etc. we'd still be in the same situation.

I couldn't agree with you more.

I am a Ron Paul man. Not blindingly...

Economically. Yes.

[Dr.3D]

We're not treating inflation right now, so it's not "treating inflation with more inflation".

Yes, we've experienced inflation, but inflation in of itself is not responsible for the lack of credit, the damage to the housing market, and the demise of many financial institutions.

Are you sure you are a Ron Paul supporter?

Listen to this video and at 3:18 into it where he says what I just said.
http://www.youtube.com/watch?v=iskf4rk8-l0

[Ozwest]

Okay kid, was that a proposal?

God damn.

I do my best to not drop my punches.

Thank you.

[Ozwest]

Are you sure you are a Ron Paul supporter?

Listen to this video and at 3:18 into it where he says what I just said.
http://www.youtube.com/watch?v=iskf4rk8-l0

Yes.

Please don't challenge me.

[Dr.3D]

Yes.

Please don't challenge me.

Was I addressing you with that post?

[vote4ronpauleeze]

Are you sure you are a Ron Paul supporter?

Listen to this video and at 3:18 into it where he says what I just said.
http://www.youtube.com/watch?v=iskf4rk8-l0

Yeah, I saw that and his speaking before Bernanke.... I'm a huge Ron Paul supporter but I tend to diverge from his thinking to some extent on this issue. The reason being, I feel this is a situation that was created by a terrible job by the Fed. Greenspan and Bernanke kept interest rates too low for too long. Like Paul even said before, they had interest rates low so new projects could only be profitable at those low rates, therefore they weren't as fundamentally strong.

With that said, I think the taxpayer's have been screwed thus far, but would be ultimately screwed with a shutdown of the capital markets. No more loans would be made for small businesses, for the purchase of cars, for student loans, etc.

I think we need to free up our credit system, and THEN make a major overhaul in the structure of the Fed, Treasury, and financial committees...

[Ozwest]

Was I addressing you with that post?

I'm not sure.

I'm pissed and stoned.

A lot of people congratulated me on my 50'th.

I'm buggered!

[Dr.3D]

I'm not sure.

I'm pissed and stoned.

A lot of people congratulated me on my 50'th.

I'm buggered!

Have a happy birthday Ozwest. In around 13 years you will be as old as I am now.

[swirling_vortex]

Yeah, I saw that and his speaking before Bernanke.... I'm a huge Ron Paul supporter but I tend to diverge from his thinking to some extent on this issue. The reason being, I feel this is a situation that was created by a terrible job by the Fed. Greenspan and Bernanke kept interest rates too low for too long. Like Paul even said before, they had interest rates low so new projects could only be profitable at those low rates, therefore they weren't as fundamentally strong.

With that said, I think the taxpayer's have been screwed thus far, but would be ultimately screwed with a shutdown of the capital markets. No more loans would be made for small businesses, for the purchase of cars, for student loans, etc.

I think we need to free up our credit system, and THEN make a major overhaul in the structure of the Fed, Treasury, and financial committees...

The problem is that any "proposal" of such a bailout will be made to ensure that the current system stays in place. The Fed was never designed to actually help the economy, in fact, bailout is the name of the game they have played for many years. Don't underestimate helicopter Ben, he knows exactly what's going on and how his position of power is enough to screw up our whole currency while catering to a very elite few.

We face 2 choices. We can let the crash happen, the markets will self correct, and people will actually save their money or we bailout the market, experience more inflation, and make the future crash hurt even more. We've created a huge market bubble; you can only keep that bubble so big for so long before the market corrects itself.

[vote4ronpauleeze]

The problem is that any "proposal" of such a bailout will be made to ensure that the current system stays in place. The Fed was never designed to actually help the economy, in fact, bailout is the name of the game they have played for many years. Don't underestimate helicopter Ben, he knows exactly what's going on and how his position of power is enough to screw up our whole currency while catering to a very elite few.

We face 2 choices. We can let the crash happen, the markets will self correct, and people will actually save their money or we bailout the market, experience more inflation, and make the future crash hurt even more. We've created a huge market bubble; you can only keep that bubble so big for so long before the market corrects itself.

You're right that if we let the market crash it will eventually correct itself. There is absolutely no doubt about that. However, do you realize what that will mean for the next 10 years? This could potentially be worse than the Great Depression. Never before have our markets been so interconnected. What started as a "housing problem" would mean that only those with cash would be able to attend college, only those with cash would be able to buy cars, MOST of the small businesses would go belly up, unemployment would be at all time highs, etc.

With a bailout, it gives us a chance to correct the system while preserving life as we know it. We can buy time to make corrections, let the housing market stabilize, and implement new lending standards. Don't get me wrong, losses DO need to be incurred and will take place. This bailout will not yield a positive return on investment for these portfolios to the investment banks.

[wizardwatson]

All the focus is on keeping capital markets moving. This is BS.

That's "bull$#@!" for the acronymically impaired.

Bush: "We need to take your money via inflation and then loan it back to you at interest."

This is the whole solution in a nutshell.

[vote4ronpauleeze]

In other words, unless you're worth millions right now, you will most assuredly suffer if nothing is done. This isn't some crazy conspiracy theory. It is the consensus and is backed by the facts of how of financial system is currently modeled.

I'm not willing to be a part of a depression because of our $#@!ty government. No thanks. I don't deserve that, and neither does 90% of our country.

[vote4ronpauleeze]

All the focus is on keeping capital markets moving. This is BS.

That's "bull$#@!" for the acronymically impaired.

Bush: "We need to take your money via inflation and then loan it back to you at interest."

This is the whole solution in a nutshell.

LOL

You've got to be kidding me. You don't have any idea how vital these "capital markets" are, do you?

I don't know if you have ever bought a house, car, attended college with student loans, or opened/maintained a business, but if you ever did any of those, you shouldn't be making that statement.

Good god.

[Ozwest]

Have a happy birthday Ozwest. In around 13 years you will be as old as I am now.

I live in hope!

Still, I had a great night.