Rejecting the Bailout: Cry Wolf Backlash?

[3113]

I'm reading about some big protests against the "Bush Bailout." While I haven't completely made up my mind about it myself, I do understand what they're going for and why.

What strikes me about the protests, however, is that it really feels like the reaction of the townfolk in the "Cry Wolf" story. Bush cried wolf on Iraq, losing us a lot of soldiers and money for, effectively, nothing. There've been all those scandals with those he's put in charge, and every time he's said, 'You can trust them..." before they proved untrustworthy.

Granted that 700 billion is a lot to ask of any people in any country, but does anyone else feel that this really is the end of the "Cry Wolf" story? The wolf is real, but no one believes the little boy's shouts as he's used up all his street cred lying about it the other times?

 

[voluptuary_manque]

I think the problem may be that many don't feel that investment bankers jumping off buildings has much to do with them so why should they have to pay to prevent it. And, I can't help but feel sympathy for that position.

 

[Belegon]

Yes, I think that is a large element at play here.

I also think that the resistance to go along has already resulted in several key points being brought to the table;

1) Limits on executive compensation
2) guarantees for taxpayer compensation, although falling short of what I want, which is an ownership stake equivalent to the investment (That's what Warren Buffett got and I respect his judgment.)
3) Most importantly, elimination of Paulson's "blank check" clause.

However, I still want to see some kind of protection for at risk families that could result in staving off foreclosures.

I do agree, however, that this is not the way to set a dangerous bankruptcy law precedent.

 

[neonlyte]

I'm reading about some big protests against the "Bush Bailout." While I haven't completely made up my mind about it myself, I do understand what they're going for and why.

What strikes me about the protests, however, is that it really feels like the reaction of the townfolk in the "Cry Wolf" story. Bush cried wolf on Iraq, losing us a lot of soldiers and money for, effectively, nothing. There've been all those scandals with those he's put in charge, and every time he's said, 'You can trust them..." before they proved untrustworthy.

Granted that 700 billion is a lot to ask of any people in any country, but does anyone else feel that this really is the end of the "Cry Wolf" story? The wolf is real, but no one believes the little boy's shouts as he's used up all his street cred lying about it the other times?

I'd go with that.

It's a complex problem far removed from the average persons experience. Even if the Alt-A's go south, it remains a problem for a fraction of the population. So yeh, sounds like bankers getting bailed out and the average Joe paying for it - go swing, GW, heard it all before.

It'll hit home when interest rates rise and the country that buys most of your paper, China, today instructed its banks not to buy any more USA paper. Hey... I'd hate to be a Presidential candidate, but I guess McCain wasn't planning on a second term anyway

 

[xssve]

It's a little of both, "you can fool some of the people...", etc.

The other part of the problem is that a lot of people are already feeling the pinch, outsourcing has hit the White collar sector, and when the pain spreads into the middle class, or what ought to be the middle class, political capital erodes far more rapidly than it does when it's merely the already disenfranchised that are getting screwed - the educated service sector are the "chattering classes" after all.

The blogs on this are almost uniformly negative, and the "blame the blacks" Federalist Society/AEI, Murray/DeSouza crowd are getting ever more shrill in their efforts to distract everybody by turning it into a populist racist snipe hunt.

That two thirds of the country is digging it's heels in should tell you something.

 

[JAMESBJOHNSON]

3113

The regular folks I speak with are convined the bail-out will do things: 1) re-fill credit cards for the bums AND 2) rescue rich bank shareholders. People suspect the fatcats will buy the profitable bank assets for a song and the average Joe gets stuck with the manure.

 

[Stella_Omega]

Those are the same folks I've been talking to, JBJ.

"Let's see; I lose my job cause the CEO fucked up.
My tax dollars bail out the CEO that lost me my job.
Then, my job gets outsourced."

yeah, there might be a real wolf out there, but so many people are already getting chewed...

 

[elsol]

I'm reading about some big protests against the "Bush Bailout." While I haven't completely made up my mind about it myself, I do understand what they're going for and why.

What strikes me about the protests, however, is that it really feels like the reaction of the townfolk in the "Cry Wolf" story. Bush cried wolf on Iraq, losing us a lot of soldiers and money for, effectively, nothing. There've been all those scandals with those he's put in charge, and every time he's said, 'You can trust them..." before they proved untrustworthy.

Granted that 700 billion is a lot to ask of any people in any country, but does anyone else feel that this really is the end of the "Cry Wolf" story? The wolf is real, but no one believes the little boy's shouts as he's used up all his street cred lying about it the other times?

I don't think it's the "Cry Wolf" thing... because I, honestly, believe people understand there IS a problem and that's it big. 100 year old financial institutions becoming non-existent in days is something that everyone 'GETS'. You can't have AIG, Lehman, WaMU get pounded in a matter of days without people seeing the smoke AND the fire.

Part of the problem is that Paulson's plan is JUST THAT FUCKING STUPID!

Seriously, you're telling me this is a monumental problem and a TWO page bill is your solution... "Hey, asshole! You about need a fucking doctorate to understand income tax laws but you can solve this with a flash story!"

How hard is for anyone to understand that "Give me 700 billion dollars with absolutely no oversight and accountability" is bullshit!

This is my teenage son coming to me with "Hey, Dad... give me the keys to your 1963 Corvette and fuck if I'm going to tell you where I'm going, what I'm doing... And don't even think you're grounding me if crash your baby either!

The little snit would be over my knee so fast, he'd faint before the my hand hit his ass.

PS. And when my kid is asking me for the keys, his two snot-nosed punk friends are standing behind him elbowing each other and nodding at each because they think they're going to have the wheels to finally lose their virginity.

 

[sr71plt]

I don't think it's the "Cry Wolf" thing... because I, honestly, believe people understand there IS a problem and that's it big. 100 year old financial institutions becoming non-existent in days is something that everyone 'GETS'. You can't have AIG, Lehman, WaMU get pounded in a matter of days without people seeing the smoke AND the fire.

Part of the problem is that Paulson's plan is JUST THAT FUCKING STUPID!

Seriously, you're telling me this is a monumental problem and a TWO page bill is your solution... "Hey, asshole! You about need a fucking doctorate to understand income tax laws but you can solve this with a flash story!"

How hard is for anyone to understand that "Give me 700 billion dollars with absolutely no oversight and accountability" is bullshit!

This is my teenage son coming to me with "Hey, Dad... give me the keys to your 1963 Corvette and fuck if I'm going to tell you where I'm going, what I'm doing... And don't even think you're grounding me if crash your baby either!

The little snit would be over my knee so fast, he'd faint before the my hand hit his ass.

PS. And when my kid is asking me for the keys, his two snot-nosed punk friends are standing behind him elbowing each other and nodding at each because they think they're going to have the wheels to finally lose their virginity.

Pretty much agree with this. I think the average Jill accepts that we have a problem more than Bush does (who is still casting this as staving off a recession. Get real on that, George).

From where I sit, though, the argument seems to be between bailing out the banks or bailing out the "gotta have it now" high risk borrowers.

As one who has lived inside his income, has mortgages on all of his property paid off, and has no debt that can't be paid off monthly, my gut feeling is that both of these groups can flush down the sewer pipe before I do any more bailing out than I already have done. My mind, of course, reminds me that we're all on the same boat and what I have in the States (as opposed to what I have stashed in a couple of other--a lot safer--places) will be devalued if we don't bounce back.

So, I agree something needs to be done. I don't see that anyone has a handle on what should be done that doesn't get some undeserving hands in my pocket, though. So, I sit back and watch.

And underneath I'm seething because few seem to realize that this isn't all about the economy--that it's that Iraq mess that has been instrumental in pulling it all down. For my money the Democratic campaign is off topic.

 

[elsol]

And one more thing.

Seriously... How exactly is this NOT a precedent that these idiots will bank on to take even greater risks? If you bail them out and do not fucking nail a few bodies to a wall... then they're going to turnaround and do it again, because they fucking damn well KNOW the government will step in.

Here's my addendum to the plan to make sure it doesn't happen again.

If they want to be bailed out... I want a 1 in 10 rule instituted.

1 in 10 executives for a company that wants to be bailed out gets put up against a wall and fucking shot. -- and it's retroactive so everybody who at the head of ship while this bullshit was forming gets counted as the 1 in 10 too.

 

[Stella_Omega]

I love you sooo much, Elsol!

Remembering how McCain went railing against American workers for being too shiftless to go pick lettuce-- I would like to offer each exec this golden parachute;
40 acres and a mule.

And underneath I'm seething because few seem to realize that this isn't all about the economy--that it's that Iraq mess that has been instrumental in pulling it all down. For my money the Democratic campaign is off topic.

And now I love you too, sr71plt, honestly.

 

[sr71plt]

And one more thing.

Seriously... How exactly is this NOT a precedent that these idiots will bank on to take even greater risks? If you bail them out and do not fucking nail a few bodies to a wall... then they're going to turnaround and do it again, because they fucking damn well KNOW the government will step in.

Here's my addendum to the plan to make sure it doesn't happen again.

If they want to be bailed out... I want a 1 in 10 rule instituted.

1 in 10 executives for a company that wants to be bailed out gets put up against a wall and fucking shot. -- and it's retroactive so everybody who at the head of ship while this bullshit was forming gets counted as the 1 in 10 too.

Of course they know it--or at least are "banking" on it. It already happened with the Savings and Loan scandal.

What is interesting is how the Republicans have gotten tied up in knots in the ideology of it (and are the ones basically who are digging their heels in on a Republican administration proposal). Just as it's the Republicans who tend to run up deficts while claiming it's the Democrats who do, it apparently is the Republicans who are going to make the country socialist.

 

[JAMESBJOHNSON]

STELLA

Yep. The Republicans just trashed the 56 BILLION bill to help with Medicaid and unemployment. This, of course, is classic GOP...700 BILLION for the bank shareholders and ZIP for the schlubs.

I suspect the malls and tattoo parlors are screaming for some credit card re-fills, too.

 

[3113]

Pretty much agree with this. I think the average Jill accepts that we have a problem more than Bush does (who is still casting this as staving off a recession. Get real on that, George).

From where I sit, though, the argument seems to be between bailing out the banks or bailing out the "gotta have it now" high risk borrowers.

As one who has lived inside his income, has mortgages on all of his property paid off, and has no debt that can't be paid off monthly, my gut feeling is that both of these groups can flush down the sewer pipe before I do any more bailing out than I already have done. My mind, of course, reminds me that we're all on the same boat and what I have in the States (as opposed to what I have stashed in a couple of other--a lot safer--places) will be devalued if we don't bounce back.

Precisely. I can fully understand how people are seeing this: Reward the banks who screwed this all up as CEO's drift down on golden parachutes, and/or reward people who made bad investments--and why should we good, careful investors do that? A gamble is a gamble.

Unfortunately, it ain't so cut-n'-dried as that. It's rather like they made a hole in the boat and we can patch it or let them drop through. They deserve to drop through, but if that hole isn't patched the boat will sink, taking us all down with it.

And yes, I'm certainly in agreement that we can't hand them the keys to a 700 billion automobile with no guarantees, but this is precisely the "cry wolf" situation I was talking about. If, in the last 8 years, the government had made good solid moves--both in domestic and foreign affairs--we might well trust them now when they say, "Hey, give me the keys to the car--you can trust me that I'll get it back to you safe."

Granted, again, that we likely wouldn't be in this situation in the first place if they had made good moves, but they've certainly undermined any faith the common folk might have in their judgement. I think it telling that Esol uses the kid/dad metaphor for taxpayers and the current administration--it's too little too late, but really, we should have remembered years ago that we were the boss and they in our employ. We've let the "kid" get away with denting and scratching up the car for too long. We should have decided years ago to say "I want guarantees," before handing over the keys, again and again.

So. What *would* be the wisest move for the U.S. to make to put on the breaks here before the car crashes?

 

[rgraham666]

Put that 700 Billion to expanding unemployment, welfare, education and training. Start a lot of pubic infrastructure projects.

Let the banks fail. Take the CEOs and upper management of the firms in trouble, grind them up fine and spread them on a farmer's field somewhere so they'll finally be useful.

 

[sr71plt]

Put that 700 Billion to expanding unemployment, welfare, education and training. Start a lot of pubic infrastructure projects.

Let the banks fail. Take the CEOs and upper management of the firms in trouble, grind them up fine and spread them on a farmer's field somewhere so they'll finally be useful.

Isn't one of the points that there really isn't any $700 billion there to spend--on anything? It's all merged into the sands of Iraq (what isn't in the pockets of Haliburton executives--and U.S. VP former Haliburton executives).

 

[JAMESBJOHNSON]

3113

These people learned from the S & L bailout that they can steal whatever isnt on fire, and the taxpayer will make the losses good.

When the internet bubble burst my state pension took the hit for the stock collapse.

When ENRON and WORLDCOM went bust, my pension took another big hit.

Now its gonna take another hit because the state owns a ton of AIG and LEHMAN crap.

In 5 years we'll go down this road again. We never learn from experience, and the same crew of pirates keeps looting us.

 

[elsol]

I also think there's something else at work... (at least for me and people like me that I know.)

To continue with the kid and dad thing.

Dad let's his kid borrow the family minivan on friday night. The kid gets drunk, tagged for a DUI, and breaks his arm in a car accident.

So two weeks or a month later, the kid comes to his dad and asks to borrow the dad's new, fully accessorized BMW 3 coupe because the kid has a date with a cheerleader to go to a great party.

The dad says "I'll lend you the car but you can't go to the party or take the cheerleader out AND don't touch the case of beer that's in the trunk."

The kid proceeds to drink the beer, take out the girlfriend who dumps him at the party for someone with more limber fingers, AND hits a tree on the way home.

Now the dad comes to me and says "I was financing the car and the insurance company won't cover the entire cost of the loan... can you bail me out by taking over the car loan? Hey, don't worry, you can keep whatever you make from selling the wreck."

What am I thinking --

"Let me see... first, your kid PROVED he was an idiot. Then he double proved his idiocy by asking for the BMW two weeks/a month after he fucked up... instead of making an effort to PROVE himself to be a responsible. Then YOU proved to be an idiot by actually lending him the BMW AFTER he proved that the fruit didn't fall far from the tree... NO! You and your fucking kid deserve it, you stupid fucking fuck-fuck!"


*sigh*

 

[elsol]

Put that 700 Billion to expanding unemployment, welfare, education and training. Start a lot of pubic infrastructure projects.

Let the banks fail. Take the CEOs and upper management of the firms in trouble, grind them up fine and spread them on a farmer's field somewhere so they'll finally be useful.

http://www.forbes.com/2008/09/23/ba...ife-cx_mw_0923uses_slide_2.html?partner=msnbc

I laughed my ass off....

 

[SlickTony]

As attractive as the idea of lining them up against the wall and shooting them is, such drastic measures tend to lead to excess. The Khmer Rouge started out with gilded kleptocrats, like most revolutionaries, and ended up offing everybody who showed signs that they might have done white-collar work, such as wearing glasses or not having calluses on their hands.

When the CEOs lose their jobs, let 'em leave with the same two cardboard boxes and escort to the front door by security as you and I would get if we lost our jobs.

 

[dr_mabeuse]

Just how long can we go before people start feeling it? And is there a Critical Point, beyond which the damage is unfixable and we slide into a real depression?

So far, things seem quite copacetic. Sure, WaMu failed and Wachovia is on the ropes, but the market is bouncing right along and the man in the street doesn't seem to be feeling anything, so where's this big crisis? I think that's a big part of it. It's easy for people to be outraged and feel they're crying Wolf because so far we're not feeling any problem. Those who have jobs still have jobs. There's still food in the stores and cash in our pockets. So where is this wolf?

If the neighborhood banks start failing, if the price of food starts shooting up, if businesses start closing right and left, people are going to reconsider and reconsider fast, but so far we're not seeing that. How long before we do? That'll be what determines how long it will be before a bail-out plan passes.

 

[JAMESBJOHNSON]

DOC

Two money guys discussed this yesterday.

The market likes the idea of a bailout BUT the bailout is gonna absord a lot of money that wont be available for business or consumption. The money will be locked up in foreclosed houses. The banks will use some of their money to re-fill depleted credit cards, make car loans and student loans, and provide more low income people with mortgages. Florida got 514 BILLION from Bush yesterday to use for low income home down payments.

So, it will be the same shit as usual, and the next 2 years are gonna be mother-fuckers for average people. The money wont be there to create new jobs, build new roads or schools, etc.

 

[SlickTony]

Just how long can we go before people start feeling it? And is there a Critical Point, beyond which the damage is unfixable and we slide into a real depression?

So far, things seem quite copacetic. Sure, WaMu failed and Wachovia is on the ropes, but the market is bouncing right along and the man in the street doesn't seem to be feeling anything, so where's this big crisis? I think that's a big part of it. It's easy for people to be outraged and feel they're crying Wolf because so far we're not feeling any problem. Those who have jobs still have jobs. There's still food in the stores and cash in our pockets. So where is this wolf?

If the neighborhood banks start failing, if the price of food starts shooting up, if businesses start closing right and left, people are going to reconsider and reconsider fast, but so far we're not seeing that. How long before we do? That'll be what determines how long it will be before a bail-out plan passes.

It's going to take neighborhood banks failing and our employers being unable to meet their payrolls before regular people see a reason to take this seriously. As long as banks are still offering $18 million golden parachutes to guys who've been on the job for all of three weeks, people are likely not to.

 

[JAMESBJOHNSON]

WAMU has about 9 million branches here in town. Ditto for WACHOVIA. That leaves BANK OF AMERICA and SUN TRUST left to do business.

Lets do a poll to predict where the economy is in one year.

Me first: DOW at 7500-8000; unemployment at 12%; GENERAL MOTORS bankrupt.

 

[Belegon]

It's not going to get that far...

Prediction: the plan will be passed with modifications very similar to what was already on the table before McCain came swooping in and got all the House Republicans to start focusing on their own priorities instead of the bigger picture. There will be some gentle tweaks to make them feel like they accomplished something.

Most importantly, the financial commitment will be spread out.