Bush Asks For $700 Billion Bailout

[Nehkara]

Bush wants OK to spend $700B

Bailout proposal sent to Congress seeks authorization to spend as much as $700 billion to buy troubled mortgage-related assets.

NEW YORK (CNNMoney.com) -- President Bush has asked Congress for the authority to spend as much as $700 billion to purchase troubled mortgage assets and contain the financial crisis.

The legislative proposal - the centerpiece of the most sweeping economic intervention by the government since the Great Depression - was sent by the White House overnight to lawmakers.

President Bush said Saturday that the plan matches the scope of the problem.

"It is a big package because it's a big problem," he told reporters at a joint news conference with Alvaro Uribe, the president of Colombia.
"The risk of doing nothing far outweighs the risk of the package," Bush said.

Good thing the stock market isn't open today (although I realize that was likely intentional) because I don't think things would be pretty.

[Claeren]

From a similar article:

The plan would give the government broad power to buy the bad debt of any U.S. financial institution for the next two years. It would raise the statutory limit on the national debt from $10.6 trillion to $11.3 trillion to make room for the massive rescue. The proposal does not specify what the government would get in return from financial companies for the federal assistance.

1) 11.6 Trillion Debt? Wasn't the debt down to like $6 Trillion under Clinton? Yikes....


2) So the average middle class American is supposed to just be happy that bankers still have overpaid jobs? I have yet to see anyone who is responsible for this have to pay a price (other than in maybe stock options). You could be a CEO of one of these companies, bring the entire financial system to the brink of collapse and STILL walk away from it all with a multi-million dollar package while taxpayers foot the bill!?

When a country starts to consistantly privatize the gains and socialize the losses it is no longer a functioning ethical democratic nation. This is no different that what Russia would do. Just brutal.

Is it really a surprise that the Feds/Government/Treasury's very good personal friends, old school chums and/or political backers happen to be the very same people who will keep their jobs, livelihoods and money while the people most distant to them -- average hardworking but faceless Americans -- will not?




Claeren.

[Claeren]

Not to derail the thread at all but I found this when looking into American debt numbers:

Since 1938 the Democrats have held the White house for 35 years, the Republicans for 34. Over that time the national debt has increased at an average annual rate of 8.7%. In years Democrats were in the White House there was an average increase of 8.3%. In years the Republicans ran the White House the debt increased an average 9.7% per year. Those averages aren’t that far apart, but they do show a bias toward more borrowing by Republicans than Democrats even including World War II.

If you look at the 59-year record of debt since the end of WWII, starting with Truman’s term, the difference between the two parties’ contributions to our national debt level change considerably. Since 1946, Democratic presidents increased the national debt an average of only 3.2% per year. The Republican presidents stay at an average increase of 9.7% per year. Republican Presidents out borrowed and spent Democratic presidents by a three to one ratio. Putting that in very real terms; for every dollar a Democratic president has raised the national debt in the past 59 years Republican presidents have raised the debt by $2.99[5].

Prior to the Neo-Conservative takeover of the Republican Party there was not much difference between the two parties’ debt philosophy. They both worked together to minimize it. However the debt has been on a steady incline ever since the Reagan presidency. The only exception to the steep increase over the last 25 years was during the Clinton presidency, when he brought spending under control and the debt growth down to almost zero.

Comparing the borrowing habits of the two parties since 1981, when the Neo-Conservative movement really took hold and government spending raced out of control, it is extremely obvious that the big spenders in Washington are Republicans and their party’s presidents. The only Democratic president since then, Mr. Clinton raised the national debt an average of 4.3% per year. The Republican presidents (Reagan, Bush, and Bush II) raised the debt an average of 10.8% per year. That is, for every dollar a Democratic President has raised the national debt in the past 25 years, Republican presidents have raised the debt by $2.53[6]. Any way you look at it Neo-Conservative Republican presidents cannot or will not control government spending.

Astounding numbers really.

Also interesting is that the spread between rich and poor has also accelerated in the last 30 years, which would indicate that this spending pattern is in one way or another benefitting one group of Americans over another.

Recent developments have added another 10%+ to the national debt so the numbers are even more heavily against neo-cons.

Bush must be close to 50% of the total debt all by himself! I guess that would make Bush the largest debt creator in the history of earth?



Claeren.

[burn_this_city]

At what point will the cost of financing their debt be more than the actual cost of running the country?

[flylock shox]

It's amazing to me how much, in the course of its time in power, the Bush administration will have managed to pour from the bucket labeled "taxpayer money" into the bucket labeled "private money." It's hard not to see this as just another prop holding up a house of cards which eventually just has to topple.

[Calgaryborn]

Originally Posted by Claeren

From a similar article:



1) 11.6 Trillion Debt? Wasn't the debt down to like $6 Trillion under Clinton? Yikes.
Claeren.

I don't know how old you are or if you were politically engaged during Clinton's two terms but, there was this little thing called "the contract with America". It was the brain child of Newt Gingrich and the Republicans in both houses. They ran and won a majority in both houses by promising to balance the budget. They also promised no new taxes. This severely limited Clinton's ability to advance his agenda. For instance Clinton had promised universal health care and had put his wife in charge of drawing up the plan but, Congress would have nothing to do with it. It was going to be too expensive. Clinton had eight years in the spotlight where he could tell people how wonderful he was and American taxpayers got less government. It worked good for both. Also Reagan's trickle down economics had time to bare much fruit and ordinary people prospered.

As for Clinton he is as responsible for this current crisis as anybody:

http://articles.latimes.com/1999/may/31/news/mn-42807

http://query.nytimes.com/gst/fullpag...p=1&sq=&st=nyt

http://www.foxnews.com/story/0,2933,424945,00.html

[calculoso]

Originally Posted by Nehkara

Bush wants OK to spend $700B

Bailout proposal sent to Congress seeks authorization to spend as much as $700 billion to buy troubled mortgage-related assets.



Good thing the stock market isn't open today (although I realize that was likely intentional) because I don't think things would be pretty.

Is this the implementation of what was said yesterday and led to 800-pt increase in the TSX? I haven't been following this very closely...

http://ctv2.theglobeandmail.com/serv...N/ctv-business

Markets around the world rallied after the U.S. government said it would create a plan to help banks unload bad debt from their balance sheets in an effort to restore both liquidity and confidence to the banking system. The government also moved to ban short-selling in about 800 financial stocks.

[Table 5]

The stock market would definitely not react badly to this, quite the opposite. Even the rumor of this happening on Thursday afternoon sent stocks soaring. The only way this is going to negatively impact stocks is if it DOESNT go through.

[badnarik]

The debt went up under clinton.

[Mike F]

Originally Posted by Claeren

2) So the average middle class American is supposed to just be happy that bankers still have overpaid jobs?

I think the average middle class American is supposed to just be happy that they can get a loan without paying 20% interest.

[Claeren]

Originally Posted by Mike F

I think the average middle class American is supposed to just be happy that they can get a loan without paying 20% interest.

They ARE paying 20% interest, and likely far more -- just not upfront.


(Assuming they are not using their VISA, which many seem to have been...)



Claeren.

[Claeren]

Originally Posted by Calgaryborn

I don't know how old you are or if you were politically engaged during Clinton's two terms but, there was this little thing called "the contract with America". It was the brain child of Newt Gingrich and the Republicans in both houses. They ran and won a majority in both houses by promising to balance the budget. They also promised no new taxes. This severely limited Clinton's ability to advance his agenda. For instance Clinton had promised universal health care and had put his wife in charge of drawing up the plan but, Congress would have nothing to do with it. It was going to be too expensive. Clinton had eight years in the spotlight where he could tell people how wonderful he was and American taxpayers got less government. It worked good for both. Also Reagan's trickle down economics had time to bare much fruit and ordinary people prospered.

As for Clinton he is as responsible for this current crisis as anybody:

http://articles.latimes.com/1999/may/31/news/mn-42807

http://query.nytimes.com/gst/fullpag...p=1&sq=&st=nyt

http://www.foxnews.com/story/0,2933,424945,00.html

I agree these things are always muddled in terms of intent and circumstance and so on but at the end of the day the debt doubled under Bush.

It is not like they are 10% apart and we are arguing over shades of grey here, they are MILES apart.

(Also, it seems there is a pretty long term trend shown that Republicans spend more than Democrats. It does not have to be a Bush v. Clinton debate.)

At the end of the day greed by both wealthy Democrats and wealthy Republicans is the problem. I think that is pretty clear? There are good guys and bad guys on both sides. Clinton might not be a 'good guy' but George W. Bush is the biggest enemy of financial sanity America has ever seen.


(There are also pretty good arguments that the lack of affordable health care in the United States is what is really killing a lot of the industrial base - for many of the major manufacturers (and largest American employers in general) healthcare premiums for their employees has been one of (or the) largest growing expense that they have. Done correctly (of course), it would have saved money not cost money.

I have yet to see good evidence that trickle down economics has ever been anything but an excuse for people at the top to pat each other on the back for shoveling public money into each others wallets.

And sub-prime mortgages in 1999 are a long ways from the mess we have now. They are certainly linked but expanding home ownership was also a priority of the Bush administration, financial regulations on mortgages, hedgefund/iBanks and on debt insurance practices were further (greatly) relaxed under Bush, other reckless spending stretched the public coffers before this even happened and the lack of a coherent early response has made this crisis worse than it should have been.

If lower spending was due to a Republican controlled house then spending should have been minimal with a Republican President. Instead Bush had managed to grow a what, a $130B deficit?, within his first year before finding all sorts of reasons to boost it into the $400B+/year range year after year.

His $2 Trillion tax cut, 40%+ geared towards the top 1% of Americans -- to foster trickle down effects no doubt -- might have been better spent on keep the debt below $10 Trillion, no?)


I am fiscally conservative by the way, how sad is it that a fiscal conservative feels compelled to bash the Republican Party?

I am not some 'spend spend spend liberal' that is for sure.



Claeren.

[RougeUnderoos]

Originally Posted by Calgaryborn

I don't know how old you are or if you were politically engaged during Clinton's two terms but, there was this little thing called "the contract with America". It was the brain child of Newt Gingrich and the Republicans in both houses. They ran and won a majority in both houses by promising to balance the budget. They also promised no new taxes. This severely limited Clinton's ability to advance his agenda. For instance Clinton had promised universal health care and had put his wife in charge of drawing up the plan but, Congress would have nothing to do with it. It was going to be too expensive. Clinton had eight years in the spotlight where he could tell people how wonderful he was and American taxpayers got less government. It worked good for both. Also Reagan's trickle down economics had time to bare much fruit and ordinary people prospered.

As for Clinton he is as responsible for this current crisis as anybody:

http://articles.latimes.com/1999/may/31/news/mn-42807

http://query.nytimes.com/gst/fullpag...p=1&sq=&st=nyt

http://www.foxnews.com/story/0,2933,424945,00.html

Well no kidding. Everyone knows the Republicans were responsible for everything good that happened under Clinton, and Clinton is responsible for everything bad happening after 8 years of Bush's good governance.

Clinton is a rich, influential guy with a very large basement. Did anyone ever look for the WMD down there?

[Flames in 07]

Originally Posted by Nehkara

Bush wants OK to spend $700B

Bailout proposal sent to Congress seeks authorization to spend as much as $700 billion to buy troubled mortgage-related assets.



Good thing the stock market isn't open today (although I realize that was likely intentional) because I don't think things would be pretty.

Hm, isn't this the very news that move the market to single and 2 day record highs at the end of the week?

[Locke]

Whats another Trillion at this point?

[Mike F]

The New York Times analyzes the proposal:

Some question the prudence of adding to the nation’s overall debt at a time when the Treasury relies on the largess of foreigners to cover the bills. Even so, there is wide agreement that a broad intervention like the one Treasury is proposing is necessary.

“It goes a long way. It ameliorates it very substantially,” said Alan S. Blinder, an economist at Princeton and a former vice chairman of the board of governors at the Federal Reserve, who has said for months that the government must step in forcefully to buy mortgage-linked investments.

Still, the prospect that the government is preparing to wade in deep — perhaps sparing families from foreclosure and banks from insolvency — has muted talk of the most dire possibilities: a severe shortage of credit that would crimp the availability of finance for many years, effectively halting economic growth.

“The risk of ending up like Japan, with 10 years of stagnation, is now much lessened,” said Nouriel Roubini, an economist at the Stern School of Business at New York University. “The recession train has left the station, but it’s going to be 18 months instead of five years.”

[jammies]

Originally Posted by Calgaryborn

http://query.nytimes.com/gst/fullpag...p=1&sq=&st=nytl

The NY Times? It's a rag!

[Calgaryborn]

Originally Posted by Claeren

I agree these things are always muddled in terms of intent and circumstance and so on but at the end of the day the debt doubled under Bush.

It is not like they are 10% apart and we are arguing over shades of grey here, they are MILES apart.

(Also, it seems there is a pretty long term trend shown that Republicans spend more than Democrats. It does not have to be a Bush v. Clinton debate.)

At the end of the day greed by both wealthy Democrats and wealthy Republicans is the problem. I think that is pretty clear? There are good guys and bad guys on both sides. Clinton might not be a 'good guy' but George W. Bush is the biggest enemy of financial sanity America has ever seen.

I don't know if I agree with that. Bush's administration has had to deal with the twin towers bombing, three major and costly hurricanes, two wars and now this. On top of that he has reworked and strengthen security within the States in ways not imagined before 9/11. I don't know homeland security's budget but, you can rest assured it eclipse most other agencies. You can argue the merits of Iraq but it was voted on and it became a huge cost to the economy.

In 2003 Bush did try to take control of Fanny Mae and was stopped by Congress. Like McCain(in 2005) he seen the danger coming:

http://online.wsj.com/article/SB1068...?mod=googlewsj

Originally Posted by Claeren

(There are also pretty good arguments that the lack of affordable health care in the United States is what is really killing a lot of the industrial base - for many of the major manufacturers (and largest American employers in general) health care premiums for their employees has been one of (or the) largest growing expense that they have. Done correctly (of course), it would have saved money not cost money.

I don't know. I hope you are right. I have been wondering these last few days if anything is going to happen as far as change with the new burdens being placed on American tax payers. This current crisis may have closed that window.

Originally Posted by Claeren

I have yet to see good evidence that trickle down economics has ever been anything but an excuse for people at the top to pat each other on the back for shoveling public money into each others wallets.

You don't sound like a conservative economically when you use a phrase like "shoveling public money into each others wallets". The issue is how much of their money you let them keep. They pay more because they have more but, how much do you take? Reagan believed that if you didn't take too much of their money the wealthy and their corporations would invest in the economy with the surplus and that growth would benefit everyone. There is no question the economy has steadily grown since that time. I'm not sure if there has even been one quarter where it has declined. I know there hasn't been two. That is remarkable considering the growth of government and what America has faced.

I think the reason why there has been less wealth seen in the lower middle class and poor is what they did to unions. This is something the republicans are to be blamed for. They pointed to the excesses of some Unions in certain sectors and passed laws that hindered the pressure unions could place on companies. This was done on a State level. That combined with allowing for more credit opportunities basically ruined organized labour.( If you are in debt you are very limited on the duration you can strike). Strong unions brought everybody's wages up because they set standards for pay. Workers will work for the highest bidder so nonunion employees generally received comparable increases. With the absence of strong labour action workers have been largely left out of the boom.

Originally Posted by Claeren

And sub-prime mortgages in 1999 are a long ways from the mess we have now. They are certainly linked but expanding home ownership was also a priority of the Bush administration, financial regulations on mortgages, hedgefund/iBanks and on debt insurance practices were further (greatly) relaxed under Bush, other reckless spending stretched the public coffers before this even happened and the lack of a coherent early response has made this crisis worse than it should have been.

Again as I said above Bush tried to reign in Fanny and Freddy in 2003 but, was stopped by Democrats and Republicans in Congress. I'm not saying he did everything else right though. I just haven't seen where he passed something that contributed to this mess. If you know of something specific please tell me. I'm not trying to argue. I just haven't heard of something he himself did to bring it on the American people.

Originally Posted by Claeren

If lower spending was due to a Republican controlled house then spending should have been minimal with a Republican President. Instead Bush had managed to grow a what, a $130B deficit?, within his first year before finding all sorts of reasons to boost it into the $400B+/year range year after year.

Bush was never a conservative when it came to spending. He is very much a big government kind of guy who made way too many promises to get elected. He should never have gotten involved in education at all. That had been a State and county issue until Bush. The Feds don't need to be the answer to every problem the nation faces. Bush won because of the flaws of his opponents and his personal appeal on social issues. I shudder to think what the supreme court would look like today if Gore or Kerry got in.

Originally Posted by Claeren

His $2 Trillion tax cut, 40%+ geared towards the top 1% of Americans -- to foster trickle down effects no doubt -- might have been better spent on keep the debt below $10 Trillion, no?)

I honestly don't know. Those tax cuts might be responsible for the economy chugging along even with all the spending and adversity the American economy has experienced in the last eight years. If Obama gets in and raises taxes on both companies and wealthy individuals how many are going to leave to find greener pastures? If we revert all the way back to Carter's tax rates will we end up with a Carter economy?

[Calgaryborn]

Originally Posted by jammies

The NY Times? It's a rag!

Yes it is.

[Mike F]

Originally Posted by Calgaryborn

I don't know if I agree with that. Bush's administration has had to deal with the twin towers bombing, three major and costly hurricanes, two wars and now this.

Given that Bush cleary ignored warnings about Al-qaeda when he came into office, you could argue that everything that flowed from that is at least partially self-inflicted.

And the Iraq war, the biggest money pit of them all, was completely discretionary. No one but themselves to blame for that.