You know, the great depression led to a lot of new regulations and social changes in the U.S. for most of the Americans. Infact, if we have to go through a little bit of pain it might be what's needed. Now my questions is instead of bailing out these instiutions, what if we take the money and create more social programs and government projects (think the New Deal and post deprecition recoveries?). My point is that the things that got us out of depression wasn't the recoveries in the financial sector, it was government pumping money into the hands of the American people
No, actually, they don't. This is MUCH more serious than you are taking it. The thought you are stating is like people on Bolivar saying "it's only a category 2 storm." You say crashes happen all the time. Tell me...when was the last time the entire financial sector collapsed. I'll answer it for you...1929. Yeah...but several large companies that are part of the backbone of our financial system...not so much. I'm sure they didn't think it was coming the first time. and it all relies upon the financial sector that was collapsing. Once that financial infrastructure was gone, what would the rest of this diverse economy going to do for money? The only way to avoid repeating history is to learn from it. To ignore the possibility is to invite the unthinkable. Are you seriously comparing one small segment of the economy to the companies that comprise the infrastructure that holds the rest of it together? Do you have the first clue as to the level of government intervention and projects (ie the TVA) that were required to get us out of the depression?
we need to have regulation instead of all this bailing out. BUT LETS MAKE ONE THING CLEAR, THIS WAS A GREAT DEAL FOR THE GOVERNMENT. The U.S government is given 80% of AIG and thus the profits which could be a very lucrative business deal so please don't be under the impression that we''re just handing them the money.
Wow...the government got 80% of an insurance company that was rapidly going bankrupt? Great deal. Geez.
Not to mention that 'the bailout' doesn't refer to the government acquisition of AIG, but the plan to buy up $700,000,000,000 in 'mortgage related assets' from banks. I guess since the government has been throwing insane amounts money around, its easy to get confused, but the $85,000,000,000 given to AIG for stock warrants is a drop in the bucket in comparison and is 'the AIG bailout' not the broader bailout in question.
http://www.nytimes.com/2008/09/20/w...rss&adxnnlx=1222082604-dztst0pAcQ5hp5A4JBsduw Congressional Leaders Stunned by Warnings By DAVID M. HERSZENHORN Published: September 19, 2008 WASHINGTON — It was a room full of people who rarely hold their tongues. But as the Fed chairman, Ben S. Bernanke, laid out the potentially devastating ramifications of the financial crisis before congressional leaders on Thursday night, there was a stunned silence at first. Mr. Bernanke and Treasury Secretary Henry M. Paulson Jr. had made an urgent and unusual evening visit to Capitol Hill, and they were gathered around a conference table in the offices of House Speaker Nancy Pelosi. “When you listened to him describe it you gulped," said Senator Charles E. Schumer, Democrat of New York. As Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Banking, Housing and Urban Affairs Committee, put it Friday morning on the ABC program “Good Morning America,” the congressional leaders were told “that we’re literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally.” Mr. Schumer added, “History was sort of hanging over it, like this was a moment.” When Mr. Schumer described the meeting as “somber,” Mr. Dodd cut in. “Somber doesn’t begin to justify the words,” he said. “We have never heard language like this.” “What you heard last evening,” he added, “is one of those rare moments, certainly rare in my experience here, is Democrats and Republicans deciding we need to work together quickly.” Although Mr. Schumer, Mr. Dodd and other participants declined to repeat precisely what they were told by Mr. Bernanke and Mr. Paulson, they said the two men described the financial system as effectively bound in a knot that was being pulled tighter and tighter by the day. “You have the credit lines in America, which are the lifeblood of the economy, frozen.” Mr. Schumer said. “That hasn’t happened before. It’s a brave new world. You are in uncharted territory, but the one thing you do know is you can’t leave them frozen or the economy will just head south at a rapid rate.” As he spoke, Mr. Schumer swooped his hand, to make the gesture of a plummeting bird. “You know we’d be lucky ...” he said as his voice trailed off. “Well, I’ll leave it at that.” As officials at the Treasury Department raced on Friday to draft legislative language for an ambitious plan for the government to buy billions of dollars of illiquid debt from ailing American financial institutions, legislators on Capitol Hill said they planned to work through the weekend reviewing the proposal and making efforts to bring a package of measures to the floor of the House and Senate by the end of next week. Lawmakers in both parties described the meeting in Ms. Pelosi’s office on Thursday night with Mr. Paulson and Mr. Bernanke as collaborative, and that they were prepared to put politics aside to address the needs of the American people. While Democrats initially said after the meeting that they planned to use the administration’s proposal of a huge rescue effort to win support for an economic stimulus package, they pulled back slightly on Friday morning, saying that their top priority was to help put together the bailout package and stabilize the economy. But it was clear they continued to examine ways to make clear that the government was stepping up not just to help the major financial firms but also to protect the interests of American taxpayers and families by safeguarding their pensions and college savings, and by preventing any further drying up of consumer credit. In addition to potential stimulus measures, which could include an extension of unemployment benefits and spending on public infrastructure projects, Democrats said they intended to consider measures to help stem home foreclosures and stabilize real estate values. Among the potential steps Congress can take include approving legislation to allow bankruptcy judges to modify the terms of primary mortgages — authority that the bankruptcy laws do not currently allow and that the banking industry has strenuously opposed. But the Democrats said it was too soon to discuss such details, and that they were awaiting a draft of the proposal from the Treasury Department. “We have got to deal with the foreclosure issue,” Mr. Dodd said. “You have got to stop that hemorrhaging..If you don’t, the problem doesn’t go away. Ben Bernanke has said it over and over again. Hank Paulson recognizes it. This problem began with bad lending practices. Those are his words, not mine, and so this plan must address that or I’ll be back here in front of a bank of microphones at some point explaining the next failure.” Even before the drafting of the plan was complete, the Bush administration and the Fed began efforts to sell the idea of a huge rescue to potentially skeptical rank-and-file members of Congress. Mr. Paulson and Mr. Bernanke held a conference call with House Republicans to explain their thinking. Senator Richard C. Shelby of Alabama, the senior Republican on the Senate banking committee, said in a television interview that cost to the government of purchasing bad debt could run to $1 trillion — a potential warning sign since Mr. Shelby is a longtime skeptic of government intervention in the private market. Until Mr. Shelby was interviewed on Friday morning, officials on Capitol Hill had been careful not to discuss specific figures, though the rescue envisioned by the Treasury Department clearly entails a government appropriation of hundreds of billions of dollars.
Do people understand what has happened here? Over half of the major U.S. investment banks have failed. Over half. Only two are left. The past year has seen Meryll, Bear Sterns, Lehman Brothers - all gone! Of the remaining big three, Goldmen and JP Morgan have basically agreed to end their free wheeling days and have ASKED for gov't regulation. Get that, these private investment banks, the two last bastions of American capitalism, are asking to be regulated. They know it's over. And top that off with the troubles of AIG...and people wonder if a bailout in necessary? No it's not. But i guess a robust economy isn't necessary either. You don't bail these banks out now, and the whole world will panick and we risk a economic diaster not seen since 1933. With only one bank seemingly unscathed....Citigroup - that bank is in danger as well - a commericial bank that dabbles in investment banks - it breaks all the rules of post 1933 - and if those mortage securities it's holding onto start to sour, there's an immense risk and further losses it has yet to realize. no one knows how those assets these banks are holding are valued - if citigroup has overvalued them - watch out - this could get worse. a bail out will hopefully prevent us from having to find out. right now, the gov't doesn't have a choice. but when the dust settles, there should be some major hell to pay.
More proof that the inmates are still in charge of the Asylum. Last week, as we all heard, British bank Barclay's bought Lehman Brother's for $1.75 Billion. What is flying under the radar, is that as part of the deal, Barclay's agreed to pay another $2.5 Billion in bonuses to the very same Lehman Employees who drove their company to bankruptcy. [rquoter] Last week Barclays paid $1.75 billion to buy Lehman’s North American investment banking and capital markets business. It emerged over the weekend that Barclays had agreed to pay $2.5 billion in bonuses to Lehman bankers in the United States in a move that has angered stricken staff in London. [/rquoter] They payed more in bonuses to the people who bankrupted the company than they did for the company itself. You don't think those Lehman employees are laughing all the way to the bank? Do you really think they are all torn up about what they did to the financial markets? Are they crying their eyes out and stricken with grief while they are out picking up that new Bentley they've been wanting?
And here's more proof of people jumping to conclusions. Nowhere in that article does it say that the bonus money is going to the same people that were responsible for Lehman going bankrupt. First of all, it is hard to place blame on certain people for something like that. Second, Lehman has other divisions and businesses besides the investment banking section. That money could be going to people who don't have anything to do with the investment banking business. And they did not pay 1.75 billion for the company. They paid that amount for the investment banking and capital markets divisions. In other words, they bought a few slices of an entire pizza.
Bush I bails out the S&Ls in the late 80s. Bush II bails out the Financials in the late 00s. Anybody see a pattern here?
The biggest thing that got us out of the depression was WW2. Also, is there anyway for the government to go after the ridiculous bonuses and salaries paid to top level executives these last 5 years while Rome was burning? DD
Salient point, which negates your first point that they might have been paying bonuses to people not involved in the downfall of Lehman's.
Everybody should be very angry that it was allowed to get to this, and should really be angry at the people that ran these companies into the ground and the laws that promoted terrible business practices, etc. You should be mad about it. But they have to do it. The consequences of not bailing them out are too high. But its very OK to be pissed about it.
Actually, there are none left. GS and MS are no longer investment banks, they are now regular banks just like everyone else. The era of investment banks on Wall Street is over. The implication is that they can no longer do the things they used to do when they were investment banks ... can no longer hold that type of leverage. Obviously that's a good thing in times like this.
