9/30/08

Bail Fail, Redux

So, the "bailout" / "rescue plan" / "insert your term" - got a giant FAIL.

I was against it. I'd rather have the short-term pain of allowing this situation to play out than have my kids and grand kids deal with the long-term consequences of the government's immediate and expensive band aid.

What sense have you made of this white hot mess? What do you want to happen?

Edited to add: Here are some links to things I've read that I could make sense of as I'm attempting to follow this thing.

This addresses the drastic numbers leading up to the Depression compared to the current situation. Makes you feel a Great Depression isn't quite so imminent.

This one is good too, and addresses the credit crisis which I certainly hope we don't talk ourselves into.

A clear article about why this is uncharted territory and really, no one knows what will work best.

There are greedy fat cats who need to be dealt with and are a whole issue unto themselves, this is clearly true. But I don't personally believe Wall Street Greed is the sole cause of this, so I don't see the "recovery plan" as being simply Regular Jane and Joe Taxpayer bailing them out. I think it's pretty much common knowledge that Americans have been living lifestyles far and above their means for at least 10 years, maybe 15 years? We all have heard over and over again about credit card debt, mortgage debt for bigger and bigger homes, and all manner of spending beyond our means. We also had a Congress that encouraged "flexible lending" practices on the belief that every American should own a home. (Well, that is ideal and wonderful, but is that really possible?) Growth in the financial and housing markets covered a multitude of sins, but growth slows and bubbles burst. Now we're all in trouble and we're going to pay for a bailout. Yes, some greedy f*ckers took advantage of all the growth, spending, and debt and they encouraged more of it, but a whole lot more went into this than a bunch of multimillion dollar executive salaries.

So there is plenty of blame to go around, from the Money Whores on the Street, to the Fed and the Treasury, the government, and American consumerist/materialist society. That's my take.

And of course you and I never lived beyond our means. It was everyone else, obviously.

My hope at this point is that we've bought a cooling off period of a few days to think this though a little more and come to a better plan than the "crap sandwich" we were offered yesterday. We need a "recovery plan" but not a knee-jerk, emotional one. It should be as limited as possible to achieve the goal of restoring some stability and confidence. (Like how did car manufacturing get proposed in the last few days? Just like Congress to go dumping every freakin' thing in there.)

Grrr.

READ THIS! This is sad, but I laughed several times. He NAILS THEM ALL in good bipartisan fashion. (btw..."coprophagy" means basically, "eating shit.")

14 comments:

Sugarplum's Mom said...

I will have to go back and read your links, but yeah, I think it's been a combo of things. I agree - in our society people are encouraged to live beyond their means. It's all about who has more/bigger/better and doesn't matter if getting there has long term negative impact.. until they're finally faced with having to take on the responsibility.
I have a relative who owns a small business. And runs it badly. And has for 17 years. They are in the worst position they've ever been in and honestly, I think it's 17 years of extremely poor management that has gotten them there. Not the president. Not the war. Not the economy. It's their own lack of responsibility.

anglophilefootballfanatic.com said...

Thinking about this makes me start to twitch. It's such a giant mess. I hope we don't bail them out as that is leading towards socialism. And, no matter how scary it gets? I don't want to slowly go that direction.

Michelle Smiles said...

I'm against the bail out bill. We are supposed to be capitalists - that means that good with the bad. I'll admit to being scared of what the short term fall out might be.

We try to live within our means but certainly could do a better job. I didn't live within my means in my 20's (mostly because I was a social worker and living within my means would have meant living in a card board box) and it took me years to recover from it financially. We've been casually shopping for a house - we aren't quite ready to buy yet. It has been interesting to see the reactions when we tell a realtor that some of their floor plans are bigger than we need. They assume we mean that it is more $$ than we can afford and try to show us that we can afford it. It isn't about going to the absolute limit of what we can afford - we don't want more house than we will live in. Yes we have to pay for that extra space but my thought is more that I would have to clean it and buy furniture for that wasted space.

Amy @ Milk Breath and Margaritas said...

Michelle - You got that right! The bigger it is the more it is to clean.

I remember with both of our houses being absolutely stunned at what the bank said they would loan us. WAY more than was reasonable.

JCK said...

Great post! I agree with you. We definitely need a cooling off period.

Ballenger said...

Like Sugarplum's Mom, I'd have to read your links, but my knee-jerk reaction is yours -- both lenders and borrowers could have been more responsible. I think consumer debt began to be a problem in the 1980s. We started to think of credit as buying power rather than making sure we made cash transactions. Additionally, we started to redefine owning a house as having a note and not a clear title.

We began to see deregulation with Clinton and a Republican Congress. That deregulation continued. I like to think of myself as young, but I do remember the savings and loan debacle when we saw foolish behavior on the part of banking systems. How we thought more deregulation was a good idea after that, I'll never know.

I've been told that my views on money are archaic though. My family's efforts to be responsible have landed us in the worst part of all this, it feels like, because the credit may not be there for us when we look to buy a home in spite of our excellent record. Also, because of the way we've spent/saved and inflation has hit, our dollars are devalued. Finally, if there is "something to be got" from a bailout, we will be on the paying and not receiving end.

On the plus side, today the market took a turn for the better. The gov't could make a tidy profit on buying the loans since much of them were made in good faith and they could always have the IRS be their debt collection folks.

Audubon Ron said...

I can’t even believe this nonsense. Have they fallen on their head? My man Lou Dobbs, whom I’ve just started watching again because frankly he’s a little too over the top for me has been down on the bailout. I’m sorry, but I don’t get a bailout when I make a mistake. I get homeless. The housing market should never have accelerated that quickly to begin with. I was there in the Silicon Valley when the first IBM PC rolled to market (yes, I’m older than dirt) and little 1,000 square foot houses went from $60K to $250K overnight and then eventually to a million. How does a 1,000 square foot house cost a million?

I got land now in case I have to grow my own food. I got a water well. My own septic. No mortgage. Not one penny in debt. I had to pay all of $10 this year interest because I pay off my credit card each month. Got to get those frequent flyer miles. I pay cash for big items like my wife’s car this past year. I save. I cook. I clean, I’m a dynamo machine, whoa, lost track, where was oh yeah, AND I can be a hermit anytime I want. I’m Audubon Ron on Walden Pond.

Pop the corn this Thursday night GF. I’m gonna watch Ms. Sarah go Terminator all over Joe Biden. I mean. On the one hand, smart, good looking gal and on the other a ball headed sack of duphus. Like, what’s to choose?

Nap Warden said...

I gotta tell you, I don't know what the answer is. I am totally pissed off, I'll tell you that!
For instance...I owned Wamu. stock in my IRA. Rumor was JP Morgan was going to buy them. Fine, govt. steps in, hands the company over to JP Morgan. They win, and the shareholders get left with nothing! How is that fair? The part that kills me...the new chairman (on the job for 3 weeks) walks away with a 7.5 MILLION DOLLAR signing bonus!!! My stock is worth nothing, and he gets 7.5 million bucks. Big business, and the government are out of control...
Who do I blame...Chris Dodd. Look him up, he's the guy in charge of the Senate Banking Committee. He was in charge of passing all of the deregulation that got the banks into this mess. Oh, he has a VIP loan on his town home in DC, as well as his country home, from Countrywide Financial. Can you say conflict of interest??? I can!

Amy @ Milk Breath and Margaritas said...

Nap - here's an excerpt from the very last article I link to which calls out Dodd:

"(Barney) Frank, chairman of the House Financial Services Committee, has spent the last few years ridiculing Alan Greenspan, John McCain and others who sought more regulation for Fannie Mae's market-distorting schemes -- the fons et origo of this financial crisis. Now he says "the private sector got us into this mess." His partner in crime, Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.), a chief beneficiary of Fannie Mae lobbyists' largesse, claims this mess is the result of poor oversight -- without even hinting at the fact he is in charge of oversight of banks. They sound like pimps complaining about the prevalence of STDs among prostitutes.

Seriously y'all - read that last link!

Amy @ Milk Breath and Margaritas said...

Ron - Wow. You're all set up for this like you knew it was coming! Way to plan man.

Go Sarah!

Amy @ Milk Breath and Margaritas said...

ballenger - good comment. I wish I was more certain about the government making a profit. If these companies don't want to do business with each other because no one really knows what the hell anything is worth, do we think the government is going to figure it out? And if the gov't lucks into a profit, will they give it back to us? Ever had to file your own medical claim with an insurance company? Boy do you have to stay on top of that - they don't just offer it up. Once the gov't controls something it's hard to wrest it back from them.

As far as your careful and responsible ways with money ensuring that you now have to bear the brunt of the mess - ditto.

Ballenger said...

Oh, yes, well the market and government profit comment was made with some bit of snark on my part. ;-)

Amy @ Milk Breath and Margaritas said...

Ballenger - Everything said about this can be said with a snark, that's for sure.

I'm thinking it's time to look for property in South America. A simple place, beachfront, but a short trek to the mountains. Fairly inexpensive to fly in and out of, local Catholic school for the boys, and Internet access.

I'm off to buy those "Speak Fluent Spanish In 3 Days" CDs.

Amy @ Milk Breath and Margaritas said...

I added a new link that 's really good. I'll put it here too.

http://www.realclearpolitics.com/articles/2008/10/publics_fury_noted_now_is_time.html

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