Financial Crisis and $700 Billion Bailout: Various Thoughts from Various Places
September 22, 2008 by Miranda Marquit
Filed under Finance
On Saturday, I painstakingly wrote out a couple of blog posts about the $700 billion bailout on my mobile from Blogworld in Las Vegas. I was very disappointed that only my short blip on the national debt managed to be saved.
Since Saturday, of course, plenty of other people have been writing about the financial crisis and the $700 billion bailout. (Note: At a session I attended on financial blogs at Blogworld, at least one panelist said that the final cost of this situation would likely be $2 to $3 trillion.)
So, because I’m behind (thanks, Shanna, for taking me to the tapas place and the Greek festival on top of the conference activities) this morning, I’m just going to treat you to some of the highlights of the financial crisis coverage:
- Your ability to get credit is likely to be diminished, reports SmartMoney.
- Investing blog asks if this is a straight up bailout masquerading as a bridge loan.
- Let the lawsuits over the results of the financial crisis begin, reports BusinessWeek.
- Calculated Risk thinks that Congress should consider the $700 billion Treasury bailout plan very carefully, rather than just letting the Administration ram it through. The Wall Street Journal reports on Democrats’ plans to create limits and other conditions.
- The rhetoric is that this bailout will save us. But Consumerism Commentary challenges us to think it over and decide on the merits ourselves.
- Taxgirl looks at Paulson’s claims that the bailout will be good for taxpayers in the long run. (If someone else buys all the debt from the government.)
- My Two Dollars reports that foreign banks are going to be included in the $700 billion bailout plan. (See earlier point about the true cost of the bailout. And the fact that both McCain and Obama aren’t changing their plans.)
- Over at Action Forex, there is an analysis of the $700 bailout plan and its effect on the U.S. dollar in forex trading.
- A look at how the bailout might have been necessary for the wider economy — even with the drain that will result — at Personal Finance Corner.
- Both Get Rich Slowly and Moolanomy offer insights into the financial crisis — how we got here and where we are going.
- Frugal Dad offers a look at our culture of instant gratification, and the patience we need to develop as a society if we want to do better going forward.
- For more links, both Behind the Mortgage and MarketWatch have some directions for coverage of the financial crisis.
What do you think of the $700 billion bailout?
Its a stupid idea to bail these companies out. We the taxpayers will basically pay off their stupid debt that was generated from being greedy. The government who was suppose to watching these companies let it continue because they too were making crazy money from it.
Most Americans have enough debt to worry about then saving CEOs millions of dollars in salary. The way to do it is basically say your are bankrupt and start taking the debt out of the CEOs billions of dollars pockets.
These CEOs are sitting in their multi-million dollar homes while the American people they do not care about will save their butt.
Its not right they we have to take the bad debt, did we decide to make bad decisions, then why do i have to pay for it.
Thank you for including my article. I am still waiting to see how this will all work itself out.
Thanks for sharing your thoughts, Brian! It does seem quite unfair to parrot a line about “free market” and “trickle down” for years and years and then bail out the banks and their executives at a cost to everyone else.
I actually really like a solution posited by BloggingStocks (http://www.bloggingstocks.com/2008/09/23/an-alternative-to-the-banking-bailout-bail-out-homeowners/): Let homeowners refinance through the government, and then the government gets equity in those homes — as well as the option to sell the bad debt. Then the bad loans get off the banks’ books, the government stands to actually make money, and homeowners get out of trouble.
All of this without giving all-out handouts or waiting for the system to completely collapse and take everyone down with it.
I would also add that whatever bailout occurs will not sit well with many Americans. I recall the backlash with Enron and Worldcom and how lavish the CEO’s lived in excess. Well, the same occurs on Wall St. and it’s going to frustrating to watch taxpayer money help out millionaires.
Also, if we get ourselves into a financial disaster, we have to file bankruptcy with no government bailout. The common taxpayer is too small to bailout, while the large Fortune 500 companies are exempt. It will be interesting to see how this changes our government and financial regulation.
Thanks, Scott! I agree that it is hard to see millionaires bailed out while Main Street gets the shaft. It’s like that story of how the secretary has more taxable income than her boss, because he knows the loopholes. The middle class routinely gets the shaft.
Of course, there were all sorts of regs after the Depression, meant to keep this sort of thing from happening again. And with deregulation, instead of seeing business policing itself through the “free market” we have instead seen new ways of making a lot of money in risky ways for a few people, while socializing the risk so that the rest of us pay.
It’s a quite difficult decision for any politician choosing between more bailout packages or letting the free market economic principles take care of the failed businesses, whether it is the financial institutions or automakers. The main focus should be defending the interests of middle-class Americans and creating a stable economic system that will guarantee long-term stability and sustainability. But here we also can face more challenges, since right now the Washington politicians are talking about the second large bailout package. If we bailout financial institutions and other industries again, when are they going to ask for the third bailout package? Or fourth? Maybe this is a time to let free market economy work rather than keep bailing out large, failed corporations? After all, it is the small and medium size businesses that create vast majority of middle-class jobs in America, not the large corporations. Maybe the government is better off to replace banks in lending practices and directly give loan packages with low interest rates to small and medium size businesses? That might work better and have a direct, immediate impact on economy and the middle-class America…
Personally, David, I agree that the focus should be on individuals and smaller businesses. The “trickle down” policies that have been followed for 25 years haven’t worked. Instead of bailing the big guys and waiting for it to filter to us, they should approach it “bottom up” and give help directly to the middle class that actually supports the nation’s economy.