40 replies to this topic

[Kicking Horse]

So Bush signed the bailout yesterday.

Emax what do you think will happen now?

[Emax]

Kicking Horse, on Oct 4 2008, 02:16 PM, said:

So Bush signed the bailout yesterday.

Emax what do you think will happen now?

Big rebound followed by decline. This is not a fix - it's a band-aid. A change in the legal system will be needed - one that dramatically frees up the roadblocks to the death penalty.

[Callao]

To level the playing field in their world of liberally-tilted media, Investors Business Daily has put out a series of articles examining the "Uncommon Knowledge" not covered by mainstream media. They look into "how we got here, who's responsible, and why nothing was done." Here is the first of the articles.

'Crony' Capitalism Is Root Cause Of Fannie And Freddie Troubles
By TERRY JONES
INVESTOR'S BUSINESS DAILY | Posted Monday, September 22, 2008 4:30 PM PT

In the past couple of weeks, as the financial crisis has intensified, a new talking point has emerged from the Democrats in Congress: This is all a "crisis of capitalism," in socialist financier George Soros' phrase, and a failure to regulate our markets sufficiently.
Well, those critics may be right — it is a crisis of capitalism. A crisis of politically driven crony capitalism, to be precise.
Indeed, Democrats have so effectively mastered crony capitalism as a governing strategy that they've convinced many in the media and the public that they had nothing whatsoever to do with our current financial woes.
Barack Obama has repeatedly blasted "Bush-McCain" economic policies as the cause, as if the two were joined at the hip.
Funny, because over the past 8 years, those who tried to fix Fannie Mae and Freddie Mac — the trigger for today's widespread global financial meltdown — were stymied repeatedly by congressional Democrats.
This wasn't an accident. Though some key Republicans deserve blame as well, it was a concerted Democratic effort that made reform of Fannie and Freddie impossible.
The reason for this is simple: Fannie and Freddie became massive providers both of reliable votes among grateful low-income homeowners, and of massive giving to the Democratic Party by grateful investment bankers, both at the two government-sponsored enterprises and on Wall Street.
The result: A huge taxpayer rescue that at last estimate is approaching $700 billion but may go even higher.
It all started, innocently enough, in 1994 with President Clinton's rewrite of the Carter-era Community Reinvestment Act.
Ostensibly intended to help deserving minority families afford homes — a noble idea — it instead led to a reckless surge in mortgage lending that has pushed our financial system to the brink of chaos.

Subprime's Mentors
Fannie and Freddie, the main vehicle for Clinton's multicultural housing policy, drove the explosion of the subprime housing market by buying up literally hundreds of billions of dollars in substandard loans — funding loans that ordinarily wouldn't have been made based on such time-honored notions as putting money down, having sufficient income, and maintaining a payment record indicating creditworthiness.
With all the old rules out the window, Fannie and Freddie gobbled up the market. Using extraordinary leverage, they eventually controlled 90% of the secondary market mortgages. Their total portfolio of loans topped $5.4 trillion — half of all U.S. mortgage lending. They borrowed $1.5 trillion from U.S. capital markets with — wink, wink — an "implicit" government guarantee of the debts.
This created the problem we are having today.
As we noted a week ago, subprime lending surged from around $35 billion in 1994 to nearly $1 trillion last year — for total growth of 2,757% as of last year.
No real market grows that fast for that long without being fixed.
And that's just what Fannie and Freddie were — fixed. They became a government-run, privately owned home finance monopoly.
Fannie and Freddie became huge contributors to Congress, spending millions to influence votes. As we've noted here before, the bulk of the money went to Democrats.

Dollars To Dems
Meanwhile, Fannie and Freddie also became a kind of jobs program for out-of-work Democrats.
Franklin Raines and Jim Johnson, the CEOs under whom the worst excesses took place in the late 1990s to mid-2000s, were both high-placed Democratic operatives and advisers to presidential candidate Barack Obama.
Clinton administration official Jamie Gorelick also got taken care of by the Fannie-Freddie circle. So did top Clinton aide Rahm Emanuel, among others.
On the surface, this sounds innocent. Someone has to head the highly political Fannie and Freddie, right?
But this is why crony capitalism is so dangerous. Those in power at Fannie and Freddie, as the sirens began to wail about some of their more egregious practices, began to bully those who opposed them.
That included journalists, like the Wall Street Journal's Paul Gigot, and GOP congressmen, like Wisconsin Rep. Paul Ryan, whom Fannie and Freddie actively lobbied against in his own district. Rep. Cliff Stearns, R-Fla., who tried to hold hearings on Fannie's and Freddie's questionable accounting practices in 2004, found himself stripped of responsibility for their oversight by House Speaker Dennis Hastert — a Republican.
Where, you ask, were the regulators?
Congress created a weak regulator to oversee Freddie and Fannie — the Office of Federal Housing Enterprise Oversight — which had to go hat in hand each year to Capitol Hill for its budget, unlike other major regulators.
With lax oversight, Fannie and Freddie had a green light to expand their operations at breakneck speed.
Fannie and Freddie had a reliable coterie of supporters in the Senate, especially among Democrats.
"We now know that many of the senators who protected Fannie and Freddie, including Barack Obama, Hillary Clinton and Christopher Dodd, have received mind-boggling levels of financial support from them over the years," wrote economist Kevin Hassett on Bloomberg.com this week.

Buying Friends In High Places
Over the span of his career, Obama ranks No. 2 in campaign donations from Fannie and Freddie, taking over $125,000. Dodd, head of the Senate Banking panel, is tops at $165,000. Clinton, ranked 12th, has collected $75,000.
Meanwhile, Freddie and Fannie opened what were euphemistically called "Partnership Offices" in the districts of key members of Congress to channel millions of dollars in funding and patronage to their supporters.
In the space of a little more than a decade, Fannie and Freddie spent close to $150 million on lobbying efforts. So pervasive were their efforts, they seemed unassailable, even during a Republican administration.
Yet, by 2004, the crony capitalism had gone too far. Even OFHEO issued a report essentially criticizing Fannie and Freddie for Enron-style accounting that let them boost profits in order to pay their politically well-connected executives hefty bonuses.
It emerged that Clinton aide Raines, who took Fannie Mae's helm as CEO in 1999, took in nearly $100 million by the time he left in 2005. Others, including former Clinton Justice Department official Gorelick, took $75 million from the Fannie-Freddie piggy bank.
Even so, Fannie and Freddie were forced to restate their earnings by some $3.5 billion, due to the accounting shenanigans.
As we noted, those who tried to halt this frenzy of activity found themselves hit by a political buzz saw.
President Bush, reviled and criticized by Democrats, tried no fewer than 17 times, by White House count, to raise the issue of Fannie-Freddie reform. A bill cleared the Senate Banking panel in 2005, but stalled due to implacable opposition from Democrats and a critical core of GOP abettors. Rep. Barney Frank, who now runs the powerful House Financial Services Committee, helped spearhead that fight.
Now, with the taxpayer tab approaching $1 trillion or more, we're learning the costs of crony capitalism.
In the coming days, an IBD series will look into this phenomenon in greater detail — how we got here, who's responsible, and why nothing was done.

Investors Business Daily

[Emax]

Here's a song written by Tom Paxton - shortly after and in response to the 1979 government bailout of Chrysler.

I think we should e-mail Tom and Arlo - asking for a 2008 sequel.

I'd love to post the MP3, but it's 4mb and Bill won't allow it.

/////////////////////////////////////

I'm Changing My Name to Chrysler
by Tom Paxton

Oh the price of gold is rising out of sight
And the dollar is in sorry shape tonight
What the dollar used to get us
Now won't buy a head of lettuce
No the economic forecast isn't right
But amidst the clouds I spot a shining ray

I can even glimpse a new and better way
And I've demised a plan of action
Worked it down to the last fraction
And I'm going into action here today

CHORUS:
I am changing my name to Chrysler
I am going down to Washington D.C.
I will tell some power broker
What they did for Iacocca
Will be perfectly acceptable to me
I am changing my name to Chrysler
I am headed for that great receiving line
So when they hand a million grand out
I'll be standing with my hand out
Yes sire I'll get mine

When my creditors are screaming for their dough
I'll be proud to tell them all where they can all go
They won't have to scream and holler
They'll be paid to the last dollar
Where the endless streams of money seem to flow
I'll be glad to tell them what they can do
It's a matter of a simple form or two
It's not just renumeration it's a liberal education
Ain't you kind of glad that I'm in debt to you

CHORUS

Since the first amphibians crawled out of the slime
We've been struggling in an unrelenting climb
We were hardly up and walking before money started talking
And it's sad that failure is an awful crime
Well it's been that way for a millenium or two
But now it seems that there's a different point of view
If you're a corporate titanic and your failure is gigantic
Down to congress there's a safety net for you

CHORUS

[k2skier]

Callao, on Oct 6 2008, 07:45 PM, said:

To level the playing field in their world of liberally-tilted media, Investors Business Daily has put out a series of articles examining the "Uncommon Knowledge" not covered by mainstream media. They look into "how we got here, who's responsible, and why nothing was done." Here is the first of the articles.

'Crony' Capitalism Is Root Cause Of Fannie And Freddie Troubles
By TERRY JONES
INVESTOR'S BUSINESS DAILY | Posted Monday, September 22, 2008 4:30 PM PT

In the past couple of weeks, as the financial crisis has intensified, a new talking point has emerged from the Democrats in Congress: This is all a "crisis of capitalism," in socialist financier George Soros' phrase, and a failure to regulate our markets sufficiently.
Well, those critics may be right — it is a crisis of capitalism. A crisis of politically driven crony capitalism, to be precise.
Indeed, Democrats have so effectively mastered crony capitalism as a governing strategy that they've convinced many in the media and the public that they had nothing whatsoever to do with our current financial woes.
Barack Obama has repeatedly blasted "Bush-McCain" economic policies as the cause, as if the two were joined at the hip.
Funny, because over the past 8 years, those who tried to fix Fannie Mae and Freddie Mac — the trigger for today's widespread global financial meltdown — were stymied repeatedly by congressional Democrats.
This wasn't an accident. Though some key Republicans deserve blame as well, it was a concerted Democratic effort that made reform of Fannie and Freddie impossible.
The reason for this is simple: Fannie and Freddie became massive providers both of reliable votes among grateful low-income homeowners, and of massive giving to the Democratic Party by grateful investment bankers, both at the two government-sponsored enterprises and on Wall Street.
The result: A huge taxpayer rescue that at last estimate is approaching $700 billion but may go even higher.
It all started, innocently enough, in 1994 with President Clinton's rewrite of the Carter-era Community Reinvestment Act.
Ostensibly intended to help deserving minority families afford homes — a noble idea — it instead led to a reckless surge in mortgage lending that has pushed our financial system to the brink of chaos.

Subprime's Mentors
Fannie and Freddie, the main vehicle for Clinton's multicultural housing policy, drove the explosion of the subprime housing market by buying up literally hundreds of billions of dollars in substandard loans — funding loans that ordinarily wouldn't have been made based on such time-honored notions as putting money down, having sufficient income, and maintaining a payment record indicating creditworthiness.
With all the old rules out the window, Fannie and Freddie gobbled up the market. Using extraordinary leverage, they eventually controlled 90% of the secondary market mortgages. Their total portfolio of loans topped $5.4 trillion — half of all U.S. mortgage lending. They borrowed $1.5 trillion from U.S. capital markets with — wink, wink — an "implicit" government guarantee of the debts.
This created the problem we are having today.
As we noted a week ago, subprime lending surged from around $35 billion in 1994 to nearly $1 trillion last year — for total growth of 2,757% as of last year.
No real market grows that fast for that long without being fixed.
And that's just what Fannie and Freddie were — fixed. They became a government-run, privately owned home finance monopoly.
Fannie and Freddie became huge contributors to Congress, spending millions to influence votes. As we've noted here before, the bulk of the money went to Democrats.

Dollars To Dems
Meanwhile, Fannie and Freddie also became a kind of jobs program for out-of-work Democrats.
Franklin Raines and Jim Johnson, the CEOs under whom the worst excesses took place in the late 1990s to mid-2000s, were both high-placed Democratic operatives and advisers to presidential candidate Barack Obama.
Clinton administration official Jamie Gorelick also got taken care of by the Fannie-Freddie circle. So did top Clinton aide Rahm Emanuel, among others.
On the surface, this sounds innocent. Someone has to head the highly political Fannie and Freddie, right?
But this is why crony capitalism is so dangerous. Those in power at Fannie and Freddie, as the sirens began to wail about some of their more egregious practices, began to bully those who opposed them.
That included journalists, like the Wall Street Journal's Paul Gigot, and GOP congressmen, like Wisconsin Rep. Paul Ryan, whom Fannie and Freddie actively lobbied against in his own district. Rep. Cliff Stearns, R-Fla., who tried to hold hearings on Fannie's and Freddie's questionable accounting practices in 2004, found himself stripped of responsibility for their oversight by House Speaker Dennis Hastert — a Republican.
Where, you ask, were the regulators?
Congress created a weak regulator to oversee Freddie and Fannie — the Office of Federal Housing Enterprise Oversight — which had to go hat in hand each year to Capitol Hill for its budget, unlike other major regulators.
With lax oversight, Fannie and Freddie had a green light to expand their operations at breakneck speed.
Fannie and Freddie had a reliable coterie of supporters in the Senate, especially among Democrats.
"We now know that many of the senators who protected Fannie and Freddie, including Barack Obama, Hillary Clinton and Christopher Dodd, have received mind-boggling levels of financial support from them over the years," wrote economist Kevin Hassett on Bloomberg.com this week.

Buying Friends In High Places
Over the span of his career, Obama ranks No. 2 in campaign donations from Fannie and Freddie, taking over $125,000. Dodd, head of the Senate Banking panel, is tops at $165,000. Clinton, ranked 12th, has collected $75,000.
Meanwhile, Freddie and Fannie opened what were euphemistically called "Partnership Offices" in the districts of key members of Congress to channel millions of dollars in funding and patronage to their supporters.
In the space of a little more than a decade, Fannie and Freddie spent close to $150 million on lobbying efforts. So pervasive were their efforts, they seemed unassailable, even during a Republican administration.
Yet, by 2004, the crony capitalism had gone too far. Even OFHEO issued a report essentially criticizing Fannie and Freddie for Enron-style accounting that let them boost profits in order to pay their politically well-connected executives hefty bonuses.
It emerged that Clinton aide Raines, who took Fannie Mae's helm as CEO in 1999, took in nearly $100 million by the time he left in 2005. Others, including former Clinton Justice Department official Gorelick, took $75 million from the Fannie-Freddie piggy bank.
Even so, Fannie and Freddie were forced to restate their earnings by some $3.5 billion, due to the accounting shenanigans.
As we noted, those who tried to halt this frenzy of activity found themselves hit by a political buzz saw.
President Bush, reviled and criticized by Democrats, tried no fewer than 17 times, by White House count, to raise the issue of Fannie-Freddie reform. A bill cleared the Senate Banking panel in 2005, but stalled due to implacable opposition from Democrats and a critical core of GOP abettors. Rep. Barney Frank, who now runs the powerful House Financial Services Committee, helped spearhead that fight.
Now, with the taxpayer tab approaching $1 trillion or more, we're learning the costs of crony capitalism.
In the coming days, an IBD series will look into this phenomenon in greater detail — how we got here, who's responsible, and why nothing was done.

Investors Business Daily

Have you listened to the interview yet? It is completely impartial.
http://www.pbs.org/m...008/watch2.html

IBD on the other hand is far right. So if I understand you, you're saying that the 8 years Democrats have held the White House since 1980 have caused the current financial situation, and the 20 years that Republicans have been in the White House since 1980 have done eveything right to avert this situation?

[Limelight]

aug, on Sep 29 2008, 09:42 PM, said:

I think Im feeling sick now . don't look at your 401k accounts

I already did And now I shell drink..........

[Callao]

k2skier, on Oct 9 2008, 12:31 PM, said:

IBD on the other hand is far right. So if I understand you, you're saying that the 8 years Democrats have held the White House since 1980 have caused the current financial situation, and the 20 years that Republicans have been in the White House since 1980 have done eveything right to avert this situation?

You mean, what IBD is suggesting? Awe, we can't kid ourselves. Neither side is perfect. Take the article for what it's worth. I think it provides a good balance for all the finger pointing toward the Right. Maybe fault lies a bit on both sides, perhaps?

[k2skier]

Callao, on Oct 9 2008, 06:03 PM, said:

You mean, what IBD is suggesting? Awe, we can't kid ourselves. Neither side is perfect. Take the article for what it's worth. I think it provides a good balance for all the finger pointing toward the Right. Maybe fault lies a bit on both sides, perhaps?

I't doesnt sound like you've watch the interview yet. All your comments are answered/covered in the interview.
Just like FOX news being balanced It's a bi-partisan problem for sure.

This post has been edited by k2skier: 09 October 2008 - 06:52 PM

[Callao]

It's ok to be biased--as long as people admit that they are biased. That way, we all know how seriously to take each other.

I figure that with k2skier's far-left ideals, my conservative views, SkiBachelor's silent thoughts on the beauties of Ron Paul doctrine, and Emax's ridiculous war on overpopulation, we could have a pretty balanced forum here.


While I'm at it, I want to apologize to k2skier for all the jabs I've thrown at him this election season.
But I figure from here, as long as you pull left and I pull right, the rest of the forum members will at least see somewhere in the middle--and we can all have a good time. Kudos!

[k2skier]

Callao, on Oct 10 2008, 12:36 PM, said:

It's ok to be biased--as long as people admit that they are biased. That way, we all know how seriously to take each other. Everyone is bias to some degree, it's called opinions.

I figure that with k2skier's far-left ideals, my conservative views, SkiBachelor's silent thoughts on the beauties of Ron Paul doctrine, and Emax's ridiculous war on overpopulation, we could have a pretty balanced forum here.
You don't know me very well, I'm not anywhere near FAR left, I lean to the right on more than a few topics.

While I'm at it, I want to apologize to k2skier for all the jabs I've thrown at him this election season.
But I figure from here, as long as you pull left and I pull right, the rest of the forum members will at least see somewhere in the middle--and we can all have a good time. Kudos! No need to apologize, we both have strong opinions and voice them. What I have always said is we need to meet in the middle and cross party lines to get this country back on track. I would be an Independent in a heart beat if the party could over take the corrupt other two.

If you haven't watched the interview yet you owe it to yourself to. Kevin Philip's is (I'm assuming) a Republican because he worked for the Nixon administration. The interview is quite enlightening and frightening.
If we sat down over a beer, or beverage of your choice, you'd be surprised to see how many Republican views I have.

[liftmech]

Regardless of who's at fault here, how many people have adressed what I think is the root cause of this- we as a society living beyond our means? I'm not immune to that either, but I think people getting loans they can't afford to pay back just to own a bigger house than they need isn't necessarily good. Same goes for getting a credit card to buy more 'things'. So you have a $10,000-limit card? Do you need to use it to buy a new flat-screen television, or should you maybe save up a little for it?

Food for thought.

[k2skier]

liftmech, on Oct 11 2008, 06:35 AM, said:

Regardless of who's at fault here, how many people have adressed what I think is the root cause of this- we as a society living beyond our means? I'm not immune to that either, but I think people getting loans they can't afford to pay back just to own a bigger house than they need isn't necessarily good. Same goes for getting a credit card to buy more 'things'. So you have a $10,000-limit card? Do you need to use it to buy a new flat-screen television, or should you maybe save up a little for it?

Food for thought.

This article in the Oregonian ties in perfectly to what you're saying;

And Now, the Bill Comes Due.
Global War Global Crisis

Andrew J. Bacevich is a professor of history and international relations at Boston University. His new book is "The Limits of Power: The End of American Exceptionalism."

http://www.washingtonpost.com/wp-dyn/conte...0301977_pf.html

He Told Us to Go Shopping. Now the Bill Is Due.

By Andrew J. Bacevich
Sunday, October 5, 2008; B03



It's widely thought that the biggest gamble President Bush ever took was deciding to invade Iraq in 2003. It wasn't. His riskiest move was actually one made right after the Sept. 11, 2001, terrorist attacks when he chose not to mobilize the country or summon his fellow citizens to any wartime economic sacrifice. Bush tried to remake the world on the cheap, and as the bill grew larger, he still refused to ask Americans to pay up. During this past week, that gamble collapsed, leaving the rest of us to sort through the wreckage.

To understand this link between today's financial crisis and Bush's wider national security decisions, we need to go back to 9/11 itself. From the very outset, the president described the "war on terror" as a vast undertaking of paramount importance. But he simultaneously urged Americans to carry on as if there were no war. "Get down to Disney World in Florida," he urged just over two weeks after 9/11. "Take your families and enjoy life, the way we want it to be enjoyed." Bush certainly wanted citizens to support his war -- he just wasn't going to require them actually to do anything. The support he sought was not active but passive. It entailed not popular engagement but popular deference. Bush simply wanted citizens (and Congress) to go along without asking too many questions.

So his administration's policies reflected an oddly business-as-usual approach. Senior officials routinely described the war as global in scope and likely to last decades, but the administration made no effort to expand the armed forces. It sought no additional revenue to cover the costs of waging a protracted conflict. It left the nation's economic priorities unchanged. Instead of sacrifices, it offered tax cuts. So as the American soldier fought, the American consumer binged, encouraged by American banks offering easy credit.

From September 2001 until September 2008, this approach allowed Bush to enjoy nearly unfettered freedom of action. To fund the war on terror, Congress gave the administration all the money it wanted. Huge bipartisan majorities appropriated hundreds of billions of dollars, producing massive federal deficits and pushing the national debt from roughly $6 trillion in 2001 to just shy of $10 trillion today. Even many liberal Democrats who decried the war routinely voted to approve this spending, as did conservative Republicans who still trumpeted their principled commitment to fiscal responsibility and balanced budgets.

Bush seems to have calculated -- cynically but correctly -- that prolonging the credit-fueled consumer binge could help keep complaints about his performance as commander in chief from becoming more than a nuisance. Members of Congress calculated -- again correctly -- that their constituents were looking to Capitol Hill for largesse, not lessons in austerity. In this sense, recklessness on Main Street, on Wall Street and at both ends of Pennsylvania Avenue proved mutually reinforcing.

For both the Bush administration and Congress, this gambit has turned out to be clever rather than smart. The ongoing crisis on Wall Street has now, in effect, ended the Bush presidency. Meanwhile, a month before elections, panic-stricken members of Congress are desperately trying to insulate Main Street from the effects of that crisis -- or at least to pass the blame onto someone else.

But in less obvious ways, the economic crisis also renders a definitive verdict on the country's post-9/11 national security strategy. The "go to Disney World" approach to waging war has produced large, unanticipated consequences. When the American people, as instructed, turned their attention back to enjoying life, their hankering for prosperity without pain deprived the administration of the wherewithal needed over the long haul to achieve some truly ambitious ends.

Even today, the scope of those ambitions is not widely understood, in part due to the administration's own obfuscations. After September 2001, senior officials described U.S. objectives as merely defensive, designed to prevent further terrorist attacks. Or they wrapped America's purposes in the gauze of ideology, saying that our aim was to spread freedom and eliminate tyranny. But in reality, the Bush strategy conceived after 9/11 was expansionist, shaped above all by geopolitical considerations. The central purpose was to secure U.S. preeminence across the strategically critical and unstable greater Middle East. Securing preeminence didn't necessarily imply conquering and occupying this vast region, but it did require changing it -- comprehensively and irrevocably. This was not some fantasy nursed by neoconservatives at the Weekly Standard or the American Enterprise Institute. Rather, it was the central pillar of the misnamed enterprise that we persist in calling the "global war on terror."

At a Pentagon press conference on Sept. 18, 2001, then-defense secretary Donald H. Rumsfeld let the cat out of the bag: "We have a choice, either to change the way we live, which is unacceptable, or to change the way that they live, and we chose the latter." This was not some slip of the tongue. The United States was now out to change the way "they" -- i.e., hundreds of millions of Muslims living in the Middle East -- live. Senior officials did not shrink from -- perhaps even relished -- the magnitude of the challenges that lay ahead. The idea, wrote chief Pentagon strategist Douglas J. Feith in a May 2004 memo, was to "transform the Middle East and the broader world of Islam generally."

But if the administration's goals were grandiose, its means were modest. The administration's governing assumption was that the U.S. military, as constituted in late 2001, ought to suffice to transform the Middle East. Bush could afford to tell the American people to go on holiday and head back to the mall because the indomitable American soldier could be counted on to liberate (and thereby pacify) the Muslim world.

For a while, that seemed to work: The Taliban fell quickly, with little need for the U.S. taxpayer to shell out for a larger military. But the Bush team turned quickly to Iraq, hoping to demonstrate on an even grander scale what the determined exercise of U.S. power could achieve. This proved a fatal miscalculation. After five and a half years of arduous effort, Iraq continues to drain U.S. resources on a colossal scale. Violence is down, but expenditures are not. An end to the U.S. commitment is nowhere in sight.

The achievements of Gen. David H. Petraeus notwithstanding, the primary lesson of the Iraq war remains this one: To imagine that the United States can easily and cheaply invade, occupy and redeem any country in the Muslim world is sheer folly. That holds true in Afghanistan, too, where the reinforcements that Gen. David D. McKiernan, the recently appointed U.S. commander, says he needs to turn things around will be unavailable until at least next spring.

Yet there is an economic lesson here too. "We have more will than wallet," the president's father said in 1989 during his own inaugural address. That is again painfully true today. The 2008 election finds the Pentagon cupboard bare, the U.S. Treasury depleted, the economy in disarray and the average American household feeling acute distress. Profligacy at home and profligacy abroad have combined to produce a grave crisis. This time around, telling Americans to head for Disney World won't work. The credit card's already maxed out, and the banks are refusing to pony up for new loans.

It's not surprising that people don't cotton to the idea of spending $700 billion to bail out Wall Street. Nor should they find it acceptable to spend as much as that, or more, to perpetuate a misguided and never-ending global war. But like it or not, the bill collector is pounding on the door. Bush's parting gift to the nation will be to let others figure out how to settle accounts.

[cjb]

So everyone that got mortgages they couldn't afford, racked up credit card bills they couldn't afford and took equity loan after equity loan from their homes can just blame Bush? Is their anything ever that he is NOT directly responsible for? Sure he is not perfect, but this is rediculous, if he had said everyone should stop spending, cancel their vacations, and plan for the terrible times then he would be strung up for that to. As for tax cuts, they are proven time and time again to RAISE overall revenue, and sacrifices? It is the governement and those in it that should do that. Don't tell the American taxpayer to sacrifice, the governement needs to cut their own pay and pet social projects. That is sacrificing, not just raising taxes on those already paying more than their share.

[aug]

I agree with cjb. Why does the American taxpayer become responisble for irresponsible home buyers and irresponsible banks with questionable lending tactics? Real estate the golden investment . How long could this go on , the price of housing increasing with the interest rates falling? Seems to me another recipe for the boom/ bust cycle. The only ones to blame are the greedy participants which includes the banks and the home buyers thinking they could afford a $300,000 house with a $60,000 annual income. No blame to the politicians they are too busy denying their involvment in anything negative.

[Emax]

Predictably, I suppose, I must agree.
I might also point out that the fall of most past civilizations has been preceded by avarice and a sense of entitlement pervading their populations.
Just looking around, I'd say we're there.

[mikest2]

Speaking of mortgage renewal:

http://www.cbc.ca/canada/british-columbia/...it-squeeze.html

[Ontariodude]

On top of all this talk about the bailout, there are reports that a second US stimulus package may be in the works.

*Source: CNN channel

[Emax]

The Financial Crisis Explained In Simple Terms

Heidi is the proprietor of a bar in Berlin. In order to increase sales, she decides to allow her loyal customers – most of whom are unemployed alcoholics – to “drink now and pay later”. She keeps track of the drinks on a ledger – thereby granting the customers loans.

Word quickly gets around and increasing numbers of customers flood Heidi’s bar.

Taking advantage of her customers’ freedom from immediate payment constraints, Heidi increases her prices for wine and beer – the most consumed beverages. Her sales volume increases massively.

A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets. He increases Heidi’s borrowing limit. He sees no reason for undue concern since he has the debts of the alcoholics as collateral.

At the bank’s corporate headquarters, expert bankers transform these customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS. These securities are then traded on markets worldwide. No on really understands what these abbreviations mean – nor do they have any idea of how these securities are guaranteed. Nevertheless, as their prices continually climb, these securities become top-selling items.

One day, although the prices are still climbing, a risk manager at the bank decides that the time has come to slowly demand payment of the debts incurred by the drinkers at Heidi’s bar. Predictably, he is fired due to his negativity. It is then discovered that the drunks cannot pay back their debts. Subsequently, Heidi cannot fulfill her load obligations and declares bankruptcy.

DRINKBOND and ALKBOND drop in price by 95%. PUKEBOND performs better, stabilizing in price after dropping by 80%.

The suppliers of Heidi’s bar, having granted her generous payment-due dates and having themselves invested in the securities, are now faced with a new situation. Her wine supplier claims bankruptcy and her beer supplier is taken over by a competitor.

The bank is saved from ruin by the Government – following round-the-clock deliberations by leaders of the governing political parties. The funds for this rescue are obtained via a new tax levied on non-drinkers.

Finally, an explanation I can understand.

[Andoman]

Emax, on Mar 3 2009, 12:48 PM, said:

The Financial Crisis Explained In Simple Terms

Heidi is the proprietor of a bar in Berlin. In order to increase sales, she decides to allow her loyal customers – most of whom are unemployed alcoholics – to “drink now and pay later”. She keeps track of the drinks on a ledger – thereby granting the customers loans.

Word quickly gets around and increasing numbers of customers flood Heidi’s bar.

Taking advantage of her customers’ freedom from immediate payment constraints, Heidi increases her prices for wine and beer – the most consumed beverages. Her sales volume increases massively.

A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets. He increases Heidi’s borrowing limit. He sees no reason for undue concern since he has the debts of the alcoholics as collateral.

At the bank’s corporate headquarters, expert bankers transform these customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS. These securities are then traded on markets worldwide. No on really understands what these abbreviations mean – nor do they have any idea of how these securities are guaranteed. Nevertheless, as their prices continually climb, these securities become top-selling items.

One day, although the prices are still climbing, a risk manager at the bank decides that the time has come to slowly demand payment of the debts incurred by the drinkers at Heidi’s bar. Predictably, he is fired due to his negativity. It is then discovered that the drunks cannot pay back their debts. Subsequently, Heidi cannot fulfill her load obligations and declares bankruptcy.

DRINKBOND and ALKBOND drop in price by 95%. PUKEBOND performs better, stabilizing in price after dropping by 80%.

The suppliers of Heidi’s bar, having granted her generous payment-due dates and having themselves invested in the securities, are now faced with a new situation. Her wine supplier claims bankruptcy and her beer supplier is taken over by a competitor.

The bank is saved from ruin by the Government – following round-the-clock deliberations by leaders of the governing political parties. The funds for this rescue are obtained via a new tax levied on non-drinkers.

Finally, an explanation I can understand.

You forgot the part where the federal government tells Heidi she HAS to make these loans.

[Kicking Horse]

How well can you guys do on this?

I made it on the Leader board.

http://www.thebailoutgame.us/