I stole this from another forum, its long but suck it up and read it:
finally something interesting to talk about. I'll try to briefly cover everything, since the best way to speed the economic recovery is to educate the people so they can tell their elected representatives exactly why they're fucking retarded.
first, the "give every American a million dollars" quote was from a recent cnbc interview, can't remember the guys name but he pretty much said that instead of giving $700 billion to Paulson, that we should have just given an equal amount to every tax paying American. Our economy is driven by the consumer, so the best way to jump start it obviously would start with them. It's an idea that will never be implemented but its interesting nonetheless.
Then paulson going back on his previous statement that he intended to buy the bad assets with the money is laughable. What's even more laughable is that Congress gave the money to someone who played a big part in how all this started. I don't personally dislike him but he has no business getting even a cent of any taxpayer money, much less dictating who does get it. Then we have probably the most laughable part of whats happening now with the automaker bail out. Almost the entire $350 billion (the first part of the $700) has been infused into the banking sector (Goldman, Citygroup, etc.), and then we have GM, Ford and Chrysler going to capitol hill trying to get a government loan for another $35 billion (i think? can't remember exact #). I thought the credit lines were thawing out? What happened to the $350b we just gave the banks? Why aren't they lending that money to the automakers instead of the government?
And now we're asking the question that nobody dares to ask. The harsh reality is that no matter what we do or how much money we throw at the economy, it is impossible for our government or any number of governments to stop what's coming. It was recently speculated that the credit-default swap market (debt leveraged against capital which is traded in worldwide markets) has ~$550 trillion in bad assets, which is more than the GDP of the world several times over. Bad assets meaning a mixture of CDO's and securities that were artificially inflated through corrupt investment firms built on the backs of honest Americans.
People are often quick to draw a link between what's happening now and the Great Depression. Back then, there was no such thing as a "security" or a credit-default swap. There was no worldwide stock exchange, there were no mutual funds, and you couldn't sit at your computer and buy/sell as many stocks as you wanted. There was no Federal Reserve to bail you out if you made a bad investment, and no FDIC to guarantee your deposits. Now we have all of these things, and they will serve to ensure that this crisis will be far costlier than the Depression was. Everyone seems to forget that with capitalism comes the potential for incredible profit and incredible loss. Those responsible have and some continue to this day exploiting the freedom of capitalism for their own benefit, and Congress looks on as they line their pockets with your taxes. Paulson wants to stop the recession when the best thing we could be doing right now is accepting the fact that yes, the banks made a huge mistake and must now pay the price. Yes, there will be painful bankruptcy's, yes people will lose their jobs and their retirement, and life won't be easy.
Clearly we've chosen the path of trying to save what never deserved to be saved in the first place. A good analogy being thrown around is that a drug addict going through withdrawal scores some drugs and feels a lot better for awhile, but then withdrawal starts again and he starts feeling really bad, so he gets more drugs, etc. Eventually the money runs out, and because you prolonged the problem for no fucking reason, it'll be that much worst when we actually have to face the truth.
Its been a long read but hopefully worth it. The automakers are just the beginning. The path we are on is a dangerous one, and I fear once the government gets used to bailing out failing industries, it is going to basically be the end of free market capitalism, even though some would say it died long ago. Why are these industries failing in the first place? Bad business models and bad management, but Morales forbid we let capitalism run its course by getting rid of the bad models and bad management and replacing them with new companies and new leadership. That would be unthinkable! Better write another $350 billion dollar check to my buddy Paulson.
edit: wanted to touch on the new mortgage proposal going around to give banks an incentive to refinance people that can't pay mortgages. First of all, giving a bank $600 per mortgage they refinance is fucking stupid, dont know how you could argue that. Second, although the housing market contributed to this whole thing it is hardly the reason we're still getting fucked. Thirdly, it seems the government doesn't understand how the housing market actually functions. They say they want to get people out of renting and/or get them/keep them in their homes they probably can't afford to start with. Right now, for example, lets say you bought a $350,000 house and your mortgage payments are $3000 a month. You could rent that same house for $1500 a month. If this was left up to the market to fix, you would see people moving into the rent market and away from owning. Then it would become $1800 a month to rent that house and only $2500 a month to own. Then eventually it would be $1950 to rent and $2250 to own. Then investors would say, hey this is a nice neighborhood and I can have 90%+ of my mortgage covered by renting it out and in 3-5 years I'll be turning a profit! That's how the real housing market works, and when that SHIT starts happening you know we've turned the corner.
Now what the idiots at the Treasury department want to do is take John who can't pay his $3000 a month and have the government subsidize his mortgage so he only has to pay half that a month, effectively cutting the amount owed in half. Next door you have Jim who, although he had to give up his Cadillac and take his kids out of private school, barely makes his $3000 payment. He gets nothing. So why would anyone who isn't completely insane make the effort to pay when the government is going to come save you from the consequences of your bad decision? They won't, thats the answer idiots. I hope they find some glimmer of intelligence before they go through with this retarded plan, otherwise you won't see the bottom in housing for another decade at least.
I thought it was a very good read and after reading the headline for the NYTimes, Paulson asking for more money, I thought that i would share it with you guys.
finally something interesting to talk about. I'll try to briefly cover everything, since the best way to speed the economic recovery is to educate the people so they can tell their elected representatives exactly why they're fucking retarded.
first, the "give every American a million dollars" quote was from a recent cnbc interview, can't remember the guys name but he pretty much said that instead of giving $700 billion to Paulson, that we should have just given an equal amount to every tax paying American. Our economy is driven by the consumer, so the best way to jump start it obviously would start with them. It's an idea that will never be implemented but its interesting nonetheless.
Then paulson going back on his previous statement that he intended to buy the bad assets with the money is laughable. What's even more laughable is that Congress gave the money to someone who played a big part in how all this started. I don't personally dislike him but he has no business getting even a cent of any taxpayer money, much less dictating who does get it. Then we have probably the most laughable part of whats happening now with the automaker bail out. Almost the entire $350 billion (the first part of the $700) has been infused into the banking sector (Goldman, Citygroup, etc.), and then we have GM, Ford and Chrysler going to capitol hill trying to get a government loan for another $35 billion (i think? can't remember exact #). I thought the credit lines were thawing out? What happened to the $350b we just gave the banks? Why aren't they lending that money to the automakers instead of the government?
And now we're asking the question that nobody dares to ask. The harsh reality is that no matter what we do or how much money we throw at the economy, it is impossible for our government or any number of governments to stop what's coming. It was recently speculated that the credit-default swap market (debt leveraged against capital which is traded in worldwide markets) has ~$550 trillion in bad assets, which is more than the GDP of the world several times over. Bad assets meaning a mixture of CDO's and securities that were artificially inflated through corrupt investment firms built on the backs of honest Americans.
People are often quick to draw a link between what's happening now and the Great Depression. Back then, there was no such thing as a "security" or a credit-default swap. There was no worldwide stock exchange, there were no mutual funds, and you couldn't sit at your computer and buy/sell as many stocks as you wanted. There was no Federal Reserve to bail you out if you made a bad investment, and no FDIC to guarantee your deposits. Now we have all of these things, and they will serve to ensure that this crisis will be far costlier than the Depression was. Everyone seems to forget that with capitalism comes the potential for incredible profit and incredible loss. Those responsible have and some continue to this day exploiting the freedom of capitalism for their own benefit, and Congress looks on as they line their pockets with your taxes. Paulson wants to stop the recession when the best thing we could be doing right now is accepting the fact that yes, the banks made a huge mistake and must now pay the price. Yes, there will be painful bankruptcy's, yes people will lose their jobs and their retirement, and life won't be easy.
Clearly we've chosen the path of trying to save what never deserved to be saved in the first place. A good analogy being thrown around is that a drug addict going through withdrawal scores some drugs and feels a lot better for awhile, but then withdrawal starts again and he starts feeling really bad, so he gets more drugs, etc. Eventually the money runs out, and because you prolonged the problem for no fucking reason, it'll be that much worst when we actually have to face the truth.
Its been a long read but hopefully worth it. The automakers are just the beginning. The path we are on is a dangerous one, and I fear once the government gets used to bailing out failing industries, it is going to basically be the end of free market capitalism, even though some would say it died long ago. Why are these industries failing in the first place? Bad business models and bad management, but Morales forbid we let capitalism run its course by getting rid of the bad models and bad management and replacing them with new companies and new leadership. That would be unthinkable! Better write another $350 billion dollar check to my buddy Paulson.
edit: wanted to touch on the new mortgage proposal going around to give banks an incentive to refinance people that can't pay mortgages. First of all, giving a bank $600 per mortgage they refinance is fucking stupid, dont know how you could argue that. Second, although the housing market contributed to this whole thing it is hardly the reason we're still getting fucked. Thirdly, it seems the government doesn't understand how the housing market actually functions. They say they want to get people out of renting and/or get them/keep them in their homes they probably can't afford to start with. Right now, for example, lets say you bought a $350,000 house and your mortgage payments are $3000 a month. You could rent that same house for $1500 a month. If this was left up to the market to fix, you would see people moving into the rent market and away from owning. Then it would become $1800 a month to rent that house and only $2500 a month to own. Then eventually it would be $1950 to rent and $2250 to own. Then investors would say, hey this is a nice neighborhood and I can have 90%+ of my mortgage covered by renting it out and in 3-5 years I'll be turning a profit! That's how the real housing market works, and when that SHIT starts happening you know we've turned the corner.
Now what the idiots at the Treasury department want to do is take John who can't pay his $3000 a month and have the government subsidize his mortgage so he only has to pay half that a month, effectively cutting the amount owed in half. Next door you have Jim who, although he had to give up his Cadillac and take his kids out of private school, barely makes his $3000 payment. He gets nothing. So why would anyone who isn't completely insane make the effort to pay when the government is going to come save you from the consequences of your bad decision? They won't, thats the answer idiots. I hope they find some glimmer of intelligence before they go through with this retarded plan, otherwise you won't see the bottom in housing for another decade at least.
I thought it was a very good read and after reading the headline for the NYTimes, Paulson asking for more money, I thought that i would share it with you guys.
Last edited by TeamOrange (2008-11-18 08:41:10)