Guess they're not impressed with the effectiveness of the bailout.

This makes more sense, both because it addresses the credit problem directly, and because they're lending money rather than giving it away.

But you'd think they could have tried this first.

fiat.

A headline correction (maybe Rogers will fix this if he moves it to the front page): "banks' " in the headline should be "commercial". The plan is to lend directly to the companies, not work through banks.

fiat. --#2 | Posted by nanc

That's a good point. It would have been better to get Congress to authorize the plan -- e.g., approve this rather than the blank check to Paulson.

Pure consolidation of power. When these businesses ultimately fail, The Fed will acquire them all...with money printed out of thin air.

This lending lockup sure looks like a "You scratch our back, we'll scratch yours" scenario. They could not get the blank check they wanted. If you won't give them the money, they'll take the assets instead.

That's a good point. It would have been better to get Congress to authorize the plan -- e.g., approve this rather than the blank check to Paulson.

What is there to authorize? The Fed does what it wants. Need money? BAMM! There it is.

What is there to authorize? The Fed does what it wants. -- #6 Iraqi

Printing money is an ordinary function of the Fed. To undertake the plan it just launched, it had to invoke "depression-era emergency powers."

Yes, they can do it. Doesn't make it a good choice.

National socialism is good when it bails out the noble class.

So in esense it's like photocopying monoploy money. The "Game" goes on but those Red and green buidings are worthless as well as the RailRoads huh?? Is THAT it??

Larry

Well borrow and spend invariably turns to tax and spend eventually... its all a matter of timing.

Folks in the know are gonna start using that F word, 'cause that's where we be going.

Fuck the commercial and investment banks, brokers, and insurance companies and their $56 trillion in bogus swaps and derivatives.

If you want to fix things do this:

1. Segregate loans between those that can be saved by converting to a fixed rate and forgiving penalties and those that cannot. Convert those that can be saved (something between 3-6 million loans).

2. Foreclose on the rest and make the lenders eat the loses.

3. For those companies which go bankrupt, make the payment of anything but salaries to Executives until the day they go down with their company illegal. All other monies for the last fiscal year must be returned to the lenders and stockholders in accordance with bankruptcy law. Make long jail sentences mandatory whenever those monies are beyond the reach of the Courts. Sentences should be longer than for crack offenses (10-30 years depending on the amounts of money involved).

Get this over with, but do not pander to the perpetrators of these crimes. Prosecute and/or Fire these people beginning with Paulson, who is doing nothing but favors for the actual crooks.

Is this in lieu of the bailout, or in addition to?

Sounds like in addition to LoD.

Isn't this nice:

"Bailout Authorizes Feds to [...] Reduce Interest and Principal at Taxpayers' Expense"

"Section 109 of the bill is entitled "Foreclosure Mitigation Efforts." It orders the secretary of the Treasury to "implement a plan that seeks to maximize assistance for homeowner." It lists as means the secretary can use for doing this: "term extensions, rate reductions, principal write downs, increases in the proportion of loans within a trust or other structure allowed to be modified, or removal of other limitation on modifications."

So in esense it's like photocopying monoploy money. The "Game" goes on but those Red and green buidings are worthless as well as the RailRoads huh?? Is THAT it??

Well sort of. It depends on how you balance the money supply with the economic growth. We would have these massive Monopoly games where everyone's got hotels and you've passed Go 23 times, and the bank runs out of money.
Now in that case it's not really inflation to go make more money, because the economic value of the game has grown as everyone has "worked" passing GO, and more money is needed.

But if you started everyone out at the beginning of the game with $5000 instead of $1500, then everyone would be able to buy everything they land on, buy houses and hotels and pay the rents and everything would be worth less effectively.

It's inflation if you print money faster than you actually produce the wealth it represents, which is probably what they'll be doing.
We're massively in debt, and the one advantage that inflation has is it makes your existing debts cheaper.

@#16 | Posted by Norm

Wrong, inflation is an increase in the supply of money. That's it, that's all it is.

Ya gotta admire DubyaCo. Just when everyone was rehearsing their sighs of relief for January 20th, the administration cranked up a whole new effort to rape and pillage America, and is well on its way to cleaning out the whole damn Treasury.

Never a dull moment, eh?

A couple of years ago Ron Paul introduced a bill to abolish the Federal Reserve and liquidate its assets. Ya' all should have listened.

Larry, it's still not too late to learn what that scam (the Federal Reserve) is doing to us all.

When they print the money it's as if you owned a Mickey Mantle rookie card (let's say you had the only one left in existence). If the government printed a million more, yours would be mostly worthless. Also the Catillon effect kicks in. The ones that get the new Mickey Mantle cards first get more value, overtime as they all get distributed down to others they become more and more worthless. Those getting them in their hands first get more value than those receiving them later. P.S. The Fed bankers get interest on all that money that the government prints (when they exclusively dole it out). Guess ya' should have woke up and listened to someone that cared to understand the problem.

"Guess ya' should have woke up and listened to someone that cared to understand the problem."

And you voted for Bush?!?

Never a dull moment, eh?

#18 | Posted by MaryTylerWhore at 2008-10-07 12:50 PM | Reply | Flag

Except with you, a dullard who believes this is all Bushco. The Federal Reserve fiat money system was always going to fail, eventually. None of our pols really understand the problem of printing money out of thin air and they will never have the political will to address some of the base issues.

"Just when everyone was rehearsing their sighs of relief for January 20th, the administration cranked up a whole new effort to rape and pillage America, and is well on its way to cleaning out the whole damn Treasury."

#18 | Posted by MaryTylerWhore

With overwhelming support from the Democrats, mind you.

The one thing McCain and Obama can certainly agree on, cleaning out the treasury.

...forget it Live OR Die....these DR Lefties think BushCo and BushCo alone is destroying the world. They could care less that their beloved Dems overwhelmingly voted for this "plan", and that there is little difference between the two major parties. They are dupes for the system. Easily distracted by the mainstream politicians and media. Don't bother to get educated....simply rail at the "system" (who they think is only BushCo). Pathetic.

@#16 | Posted by Norm

Ugg.. thats so frustrating to hear someone say that. If only we can grow the economy then inflation makes no difference. This is the school of thought that is ruining us.

The money is created from nothing and is loaned to the government by the Federal Reserve at interest, and the dollar represents a dollar that is owed to someone. And only the principle of the loan is created not the interest to pay it back. That interest is what causes the perpetual cycle of new money being created to pay the outstanding loans in existence.

So the way the system works is that eventually "the monopoly game" must end. The ever increasing economy mean we need to find more and more people to sell stuff to and at some point we are either not going to have the natural resources needed or people to sell to and then this debt is going to catch up to us and like a game of musical chairs not everyones going to make it.

Our money system.. the money system of the world is the most absurd and illogical thing every created by man, its absolutely fraudulent because only the people at the top benefit and its a tool for enslaving the world.

Read this, it was put out by the Federal Reserve Bank of Chicago in 1961 and it clearly states the unbelievable.. that banks create money from debt.

What it is...

Wrong, inflation is an increase in the supply of money. That's it, that's all it is.

#17 | Posted by JayDee

Wrong, inflation is a tax increase. Enjoy.

"inflation is a tax increase."

Yet another Econ 101 flunkee.

The textbook definition of inflation is too much money chasing too few goods.

Printing money, or shrinking the available goods, will both do it.

Wrong, inflation is a tax increase. Enjoy.

#27 | Posted by Apocalypto

lol!

Well in a way it is.. it steals money from the existing pool so we are both right in a sense.. but all inflation is.. is and increment in the amount of money in supply.

You know why counterfeiting is illegal right? Because it steals from everyone.. it's inflation. So why let government and banks preform legal counterfeiting due to inflation?

"Well in a way it is.. it steals money from the existing pool so we are both right in a sense."

Nonsense. By taking money out of the spending pool, it's deflationary.

"but all inflation is.. is and increment in the amount of money in supply."

Which should clue you in as to why your conclusion was wrong. Taxation is a decrease of the amount of money in supply.

@#30 | Posted by Danforth

No it isn't. they don't burn the money they spend it.

Allowing the government to print money allows them to get what they want without raising taxes, but it causes the money in supply to increase, saving are worth less and prices cost more.. but not right away.. the government gets to spend it into the economy BEFORE inflation takes hold so they spend it at full value. Once that new money gets to you, in order for you to adjust to the higher prices you need to ask your employer for a raise.. so there is a delay and a transfer of wealth from the people to government. This is a type of hidden tax, money is going from the people to government, what would YOU call that?

I think where your screwing up Dan is you think government creates the money.. so if they got it back then it would return to its source. That's not true, banks create it and loan it to the government.

"Allowing the government to print money allows them to get what they want without raising taxes,"

You just defeated your own argument.

"it causes the money in supply to increase"

Printing money, not taxing it. You're tying to move the goalposts.

They are GIVING the money away.

Fuck buying the debt, buy/invest in the company.

How the hell we we get repaid!!!

This is a boondogle!

"Allowing the government to print money allows them to get what they want without raising taxes,"

You just defeated your own argument.

"it causes the money in supply to increase"

Printing money, not taxing it. You're tying to move the goalposts.

#33 | Posted by Danforth

I guess I'm using the word "tax" to describe when the government takes money from people.

You must be using the word "tax" to describe a law that allows government to take money from people.

There is a transfer of money with government inflation. I laughed at Apocalypto when he wrote that "inflation is a tax".. but in a backwards round about way.. he's actually right..

there is little difference between the two major parties

Has anyone else noticed that the folks who say this all the time are almost always GOPers? Sure, there are some third-party or anarchist types who also say it, but usually it's Republicans.

If the two parties are the same, you'd think they'd vote Dem half the time, no?

LoD,

It should have been instead of the bailout. But the bailout is a done deal that has given away so far $250 billion to the wrong people without fixing the underlying problem. It should be done before another $450 billion is wasted. It will stabilize real estate faster than anything two hat Paulson has proposed. Stabilizing real estate helps everybody, not just the banks balance sheets. The reason Paulson doesn't want to do it that way is it will reduce the the total amount of debt bank earnings. Paulson solution temprarily props up unsustainable debt, because his only concern is the well being of the lenders and he'll be back in bed with them soon.

Anything the Fed does to increase lending directly to the business sector and retail customer is a good thing.

"inflation is a tax increase."

Yet another Econ 101 flunkee.

The textbook definition of inflation is too much money chasing too few goods.

Printing money, or shrinking the available goods, will both do it.

#28 | Posted by Danforth

You're dumb. If the price of goods increases, so does the tax on those goods.

well fortunately beranke is talkinga bout lowering interest rates, whew I thought we had an economic crises on our hands. fortunately the powers that be understand what is going on

Hold on to your butts. We will not be emerging from this financial crisis anytime soon irrespective of how much bad paper our government buys. The problem is lack of jobs: JOBS, JOBS, JOBS. If people had well paying jobs, there would be no mortgage crisis. And without a mortgage crisis, things would be humming along very nicely.

As was done in the great depression, the government has to get into the business of creating jobs for Americans. I would start off by forcing all employers to use the eVerify system to help rid their payrolls of illegal immigrants. Next, I would place a moratorium on all new work visas and green cards. The only people that should be working in America in such dire economic times are citizens and current green card holders.

For all you people that are pissed off at McBama.

The 3rd parties are getting together and doing their own debates now via internet broadcast.

Invitations have been sent to..

Chuck Baldwin Constitution Party
Charles Jay Boston Tea Party
Brian Moore Socialist Party
Cynthia McKinney Green Party
Ralph Nader Independent
Bob Barr Libertarian Party
Barack Obama Communist Party
John McCain Fascist Party

The Government is keeping it hush hush that the bail out is really going to be 2.5 trillion.

Don't want to upset the election I guess.

#37 | Posted by nutcase

In my limited understanding of the issue, I agree with you, if only because the bailout is really a handout, while this at least seems like there could be some sort of return. Maybe...

well lets see $600 Billion in bailouts

$700 Billion bailout bill

$900 in loans that will probably fail

$2.2 Trillion and counting.

@#41 | Posted by FedUpWithPols

Should free people be able to cross borders of free nations freely? A free market requires free movement of labor.

How will an eVerify system track what you call an "illegal" person, without tracking a "legal" person?

Anyone should be able to work in America, we don't need government control of our jobs. Let as many immigrants come as humanly possible.. let them build entire towns if they like, let them be wildly successful providing labor and even allow them to create business themselves and provide employment.

Do you remember what is at the base of the Statue of Liberty?

--
The New Colossus

Not like the brazen giant of Greek fame,

With conquering limbs astride from land to land;

Here at our sea-washed, sunset gates shall stand

A mighty woman with a torch, whose flame

Is the imprisoned lightning, and her name

Mother of Exiles. From her beacon-hand

Glows world-wide welcome; her mild eyes command

The air-bridged harbor that twin cities frame.

"Keep ancient lands, your storied pomp!" cries she

With silent lips. "Give me your tired, your poor,

Your huddled masses yearning to breathe free,

The wretched refuse of your teeming shore.

Send these, the homeless, tempest-tost to me,

I lift my lamp beside the golden door!"
--

Send America those who would escape tyranny in exchange for freedom. We wont give you a free handout (actually we will and thats the SOURCE of the immigration problem) but if you can get here, and you work, you can be successful.

i dont pretend to understand everything but all this shit just seems like reactionary bandaids.

and both candidates seem to be operating in a bubble of campaign rhetoric.

what is to be done long term?

people have mentioned public works projects, but wont THAT require the feds to borrow even MORE causing even MORE inflation?

Wealth is not a closed circle. Just because you get a piece of pie, it does not mean someone else does not. We actually create wealth from nothing.

If you act now, we'll throw in another 200 Billion worth of debt....that's right....900 Billion for only 700 Billion..............but you have to act NOW!!!!

Operators are standing by!

Very misleading headline. Fed to buy commercial paper, which is not bank debt. Anyhoo I don't know the details but buying say a trillion of commercial paper would greatly help unfreeze money funds. and seeing that CP matures in two years or less, then these short term obligations should mostly all pay off.

I don't know if they are buying from money funds, or directly. Nor do I know if they plan to roll over the paper. If they don't plan to roll, then there's a huge loomimg deadline for the corps to raise cash to meet the maturing obligation.

As for all these back and forths about inflation I have news for you. With RE, Stocks, and Bonds TANKING we are looking at huge DEFLATIONARY forces not inflation....

How about this headline.

"Government prints paper treasury notes and gives them to the Fed to back a debt that is printed on paper dollars and loaned to the government in order to buy even more notes of paper printed by other banks, while expecting the populace to labor longer house with less in exchange for them doing this."

I don't know.. is that a bit long?

...these DR Lefties think BushCo and BushCo alone is destroying the world. They could care less that their beloved Dems overwhelmingly voted for this "plan", and that there is little difference between the two major parties.

Huh? I'm a DR leftie, and I've been ranting and raving about the Dems' approval of this plan, as have many other DR lefties.

Very misleading headline.

Yeah, that's my fault. I pointed it out in post #3, hoping that Rogers would change it before moving it to the front page.

Fed to buy commercial paper, which is not bank debt. Anyhoo I don't know the details but buying say a trillion of commercial paper would greatly help unfreeze money funds. and seeing that CP matures in two years or less, then these short term obligations should mostly all pay off. -- Davethewave, #51

Yeah, agreed.

The reason that the Fed is not empowered to do this under ordinary circumstances, though, is because of the abuse of power potential -- a small group of government employees who are deliberately insulated from political oversight get to pick and choose which companies the government is going to help. In a third world country, we'd call that crony capitalism.

The reason that the Fed is not empowered to do this under ordinary circumstances, though, is because of the abuse of power potential -- a small group of government employees who are deliberately insulated from political oversight get to pick and choose which companies the government is going to help. In a third world country, we'd call that crony capitalism.

#54 | Posted by Phoenix

The group that you suggest that shouldn't exist already does. Look into the presidents Working Group on Financial Markets.. and ohh boy is it corrupt.

"inflation is a tax increase."

Yet another Econ 101 flunkee. --#28 | Posted by Danforth

Actually, I said something misleading, but whoever said "inflation is a tax increase" is essentially right.

The Fed controls the money supply, but through interest rates and open market operations (buying and selling bonds). (I should not post in a hurry before finishing my first cup of coffee after too little sleep.)

If inflation were caused by the government's printing money for its own coffers, it would be equivalent to a tax. The practice is know as "seignorage," and has been common in third world countries because it was hard for them to collect taxes, many countries could do this without the public knowing, and often the public didn't understand how it worked anyway. (My Dad never understood this -- he used to tell me that Reagan's deficits were not a problem because all the government had to do was print money.)

In macroeconomics, seigniorage is also referred to as an inflation tax, as government could pay for services by issuing new currency rather than by collecting taxes; the "inflation tax" is paid by those who hold the existing currency.[2] seignorage

The group that you suggest that shouldn't exist already does. Look into the presidents Working Group on Financial Markets.. and ohh boy is it corrupt. -- #55 | Posted by JayDee

There are usually a lot of conspiracy theories about this group floating around, but I don't think it's legally empowered to do anything but "advise."

witness the power of the Internet!

20min into this:

Should free people be able to cross borders of free nations freely? A free market requires free movement of labor.

I don't believe in free markets. I believe in fair markets. What makes you think that free people have the right to cross borders of free nations freely?

How will an eVerify system track what you call an "illegal" person, without tracking a "legal" person?

via a social security number. Legal and illegal people will get tracked.

Anyone should be able to work in America, we don't need government control of our jobs.

It is the birthright of every American citizen to participate in all that America has to offer; and that includes jobs. When jobs are given to immigrants, Americans are being denied their birthright. Parents, grand parents, great grand parents, etc., fought and died for the American way of life. American citizens are ENTITLED to their legacy.