Wednesday, December 30, 2009, 9:31AM ET - U.S. Markets close in 6 hours and 29 minutes.

Mick Weinstein The Week's Best Stock Blogs

Mick Weinstein, The Week's Best Stock Blogs

Bailout Plan: Essential or Misguided?

by Mick Weinstein

Email this Page IM this StoryBookmark this StoryAdd to your Del.icio.us accountDigg this StoryPrint this Story
Good (208 Ratings)
2.716346/5
Posted on Friday, September 26, 2008, 12:00AM
Treasury Secretary Paulson, Fed Chairman Bernanke and President Bush were doing everything in their power this week for Congress to approve their bailout plan. "If money isn't loosened up, this sucker could go down," Bush lamented last night. Yet despite Paulson getting down on his knee (literally) before Speaker Pelosi in the White House's Roosevelt Room, as of this morning there's no deal on a package that, in any case, leaves many market participants uncomfortable about the outsized role of government in business. In times of turmoil, if you want straightforward, informative commentary unencumbered by journalistic conventions, turn to smart bloggers:

Bond market veteran John Jansen: "We are flying seat of the pants, and at the moment it appears that the pilot has had a heart attack and is slumped over the control panel... I am fearful for the markets [Friday] as the already much stressed markets confront this latest blow to confidence."

Paul Kedrosky: "Congress is playing political brinkmanship with the biggest financial decision of our generation. We just had the largest bank failure in U.S. history. Credit spreads have widened to the point of gibbering meaninglessness. And some people are still nattering about what might be the perfect variant of the Paulson bailout plan. Listen. There is no perfect... Some people don't care. A few just haven't thought it through, but others are so wrapped in their anti-Wall Street vendettas, their ideological purity and their Calvinist moralizing that they would rather see everything come down around their ears... than worry that it's their economy too."

David Gaffen at WSJ.com asks "can it be any kind of good news that Wall Street is watching Washington for signals in order to get this monkey off its back? The mantra among denizens of the Street, was, has, and will remain that "gridlock is good" for the markets, because it means lawmakers aren't in the way to muck up anything that could potentially mess with the investment community. Now, of course, Wall Street's future depends on Washington, which shows what kind of mess the market has gotten into."

Investment banker Daniel Alpert poses five questions on the plan that he believes the Treasury should clarify right now. In lieu of that, "Treasury is asking us to step into a distorted world that makes little sense, based on trust and fear."

Steve Waldman calls for greater transparency on the deal: "I cannot believe that the government may trade nearly a trillion dollars of assets on my behalf, and I may never learn exactly what it did. I would never invest in a "rocket science" hedge fund whose manager refused to disclose what he was up to. It looks like I may end up paying taxes to one."

Wall Street veteran Roger Ehrenberg calls on Washington to focus on the "average, hard-working citizen's ability to live their life without economic fear not of their own doing": "Emotions are running high and, I'm afraid, many people are losing sight of the main point: frozen credit markets inhibit small and large businesses from borrowing money, people of all economic strata from buying apartments and houses, and those in financial distress owing to inappropriate mortgages from refinancing... My vision is not a transfer payment to Wall Street, but a vehicle for re-energizing and re-invigorating Main Street."

Whatever the final form of the bailout and however it's implemented, the Epicurean Dealmaker believes it's critical "to maintain a clear distinction between saving the American (and global) financial system from catastrophic lockup or breakdown - which should be the point of the whole exercise - and pulling any one (or more) particular financial institution's bacon out of the fire, which should not."

Investment analyst David Merkel urges Congress not to rush the bailout plan: "Anytime someone rushes you to a decision, watch your wallet. The crisis is not as severe as many would say, and there are other ways of handling the situation. Stopgap measures will hold us until after the new Congress is in place; there is no reason to rush a bailout."

Is the plan anti-capitalist? Accrued Interest acknowledges that "to be sure, this kind of massive government intervention is the last thing any real capitalist wants to see.... But is what we have now any better? So now we're faced with two non-capitalist paths. On one hand, the current situation. On the other hand, a government bailout. The bailout will create some semblance of confidence in financial institutions and their balance sheets... as much as we all hate the idea of a government bailout, we really need to consider what kind of capitalism we think we're defending... in the short-term, we have to stem the relentless waves of fear. Before it's too late."

Has the media neglected to adequately critique the plan? Yves Smith from NakedCapitalism was taken aback by some of the New York Times' coverage, which she viewed as "part of a disturbing pattern in the mainstream media as far as the plan is concerned... the criticism of the plan among economists has been widespread, verging on unanimity... Yet the press has treated the plan with vastly more deference than it deserves... things are going to get a lot worse before they get any better."

Bush's Call to Action

On Tuesday night, the President emphatically declared the $700 billion bailout package as the ticket to calm the markets and restore confidence in the financial system. Felix Salmon thought it was one of the best speeches of Bush's presidency. "He wasn't panicked, and he wasn't angry, and he wasn't telling us that we really had to Act Now Or Else. He was calm, and surprisingly coherent, and he took first-person responsibility for the bailout, and he explained the urgency without sounding like he was reacting in a knee-jerk manner...with the President breathing on [Paulson's] shoulder impressing on him the need to buy low, the government might not, in the end, lose as much money as I feared on this venture."

Greg Newton thinks Salmon has been "drinking the Koolaid" and has an entirely different take on the president's talk, parsing its "true meaning" line by line.

It may have been credible, but it was still an overdue and somewhat surreal affair, says Kedrosky, "with the Administration playing catch up on something monstrous that clearly has caught it almost entirely by surprise. Granted, it shouldn't have been a surprise, because this complex plot has been playing out for some time, but welcome to the movie, boy and girls. We're all hoping for a twist ending."

The Oracle of Omaha Enters the Fray

Warren Buffett swept in to play market superhero once again this week, publicly supporting the Treasury's bailout plan while investing $5 billion in Goldman Sachs on far better terms than the government has arranged in its dealings with the troubled big financials. What are we to make of this discrepancy?

"It's a classic Buffett deal," says Jeff Matthews "...he's buying into a great company at a distressed price, with unbelievably good terms. And with this $5 billion-plus investment in Goldman Sachs, he is speaking loudly and-we think-quite clearly. What we think he's saying is that the $700 billion bailout plan being pushed down the country's throat by Hank Paulson and Ben Bernanke - two men who both had seats at the bar while the lethal subprime mortgage cocktail was being concocted by Wall Street - is for the birds. As is always the case with Warren Buffett, it pays to look at what he's doing - not what he's telling CNBC. And what he's doing is not what the U.S. Treasury wants to do with Goldman's sick brethren: he is not buying Goldman's "bad" assets. He is, instead, buying preferred shares with a nice fat yield."

Henry Blodget concurs that Buffett's Goldman investment reveals the "dirty little secret" behind the Treasury's bailout plan: "The critical part of the bailout is the price the government pays for the trash assets it buys from banks. In short, if the government pays too much, the taxpayers will get hosed... Bernanke and Paulson want to pay a phantom "hold-to-maturity" price that is above the prices at which the banks are currently valuing their trash assets. The logic is that the banks' carrying value is somehow artificially depressed by a lack of liquidity... Warren Buffett, meanwhile, thinks the appropriate price would be the "market value," which he believes is below the price at which the banks are currently carrying their trash."

Portfolio manager Chad Brand: "With this deal, Buffett is banking on government intervention succeeding in greatly lowering the risk that Goldman Sachs gets into deep trouble. For such a bet, I'd say Buffett got a great deal by waiting things out and not investing until he figured the odds were stacked strongly in his favor."

Justin Fox comments that a "key to Buffett's success as an investor has been that he's never tried to call market tops or bottoms. He simply buys when things seem cheap and sells (or, more commonly, stays put) when they seem expensive. Eventually that approach almost always pays off. But for years on end, cheap can keep getting cheaper, and expensive can keep getting more expensive. So don't read too much into this news."

Mike Steinhardt of HEDGEfolios is a bit bothered by everyone's "Warren worship": "As for this Goldman investment, it is already being spun as some kind of all-clear blessing on Goldman, the financial sector, the stock market, the TARP Bailout, and just about everything else that appears to be in trouble. After all, Buffett is the greatest investor of all time they say. He would never make this investment if he didn't "know" that the TARP was a done deal... as for me, I see this investment in Goldman to be an investment in Goldman. One that only Buffett could negotiate. All the people that might rush to buy GS common tomorrow to "mindlessly imitate" Warren will not come anywhere close to what he paid."

For ongoing coverage of the market crisis and proposed bailout plan from the candid perspective of top market bloggers, visit Seeking Alpha's government policy section.

 

Email this Page IM this StoryBookmark this StoryAdd to your Del.icio.us accountDigg this StoryPrint this Story

Rate This story

Good (208 Ratings)
2.5/5
Sign-in to rate!

221 Comments

Showing comments 6-35 of 221<< PreviousNext >>
Sort: first to last

  • Tom C. - Wednesday, October 1, 2008, 11:33PM ET  Report Abuse

    • Overall: 1/5

    If this is such a crisis then it is time for Bush to step down. The government caused this crisis.

  • YY - Wednesday, October 1, 2008, 10:58PM ET  Report Abuse

    • Overall: 3/5

    A 7 questions quiz to help guide the perplexed: 1. Would you invest your money in a government-run hedge fund, whose unique edge is focusing on buying the worst junk assets? 2. This fund will flood the market with low-paying treasuries; what fraction of the investors buying these will keep them when the crisis is over? 3. How high can interest rates jump when investors dump these treasuries? Will we see a repeat of the early 80's -- 17% mortgage, 24% bank CDs? Will the FED flood the market with freshly minted dollars to purchase these treasuries? What will either of these scenarios do to the real economy? 4. What fraction of the housing foreclosures will be saved by this 700B? 5. What fraction of the backlog of unsold houses will be cleared by these $700B? 6. What fraction of the $700B will land in consumers pocket, enabling them to restore consumption growth? 7. What growth in GDP will these $700B contribute? If you have troubles answering these questions....do not worry... seems like government financial gurus ( behind this government hedge fund plan) may too need an econ-101 refresher....

  • Yahoo! Finance User - Wednesday, October 1, 2008, 8:54PM ET  Report Abuse

    • Overall: 3/5

    What's misguided are the people supporting a bailout because they haven't logically considered basic concepts, thus are easily manipulable by politicians claiming that a bailout is needed. Injecting money into an industry or economy to "get things going again" sounds good only to those applying shallow inner logic before validating fundamental principles. Wake up. The health of an economy is entirely premised on the total value of goods and services produced exceeding the total value of resources consumed, period. Yes, it is that simple. Unless productive value exceeds consumption, economic conditions (and quality of life) will deteriorate regardless of the numismatic monetarist ploys foisted onto a duped public by government and its Fascist Reserve. These money-shuffling schemes only increase the size of an impending crash by inflating the bubble of false prosperity created by paper rather than real value. For a bailout to "work" it must result in added value to back up the dollars printed, otherwise things will become economically even worse, not to mention granting license for future pillagings. Because government acts coercively, it acts in discord with market forces which are otherwise competitive and which optimally allocate resources to achieve value in excess of cost (value addition, as measured by profitability); government activities are axiomatically non-additive of value. That's why government can go on racking up huge debts every year - because a coercively-supported institution is inherently incapable of providing value in excess of its costs thus must create money out of thin air to sustain its parasitism; it only drains everyone including, ultimately, those employed within it. Government bailouts (for anything or anyone, whether for Wall Street or Main Street), capital infusions, "Industrial Policy," sub-market-rate loans, subsidies, "stimulus packages," "tax for prosperity," financial guarantees, and all other coercive (thus unaccountable) reallocation schemes create no real value on net to back the shifted / fabricated dollars, thus only add more floors to an economic house of cards (with emphasis on NET value - look up Bastiat's Broken Window Fallacy). The government and its collusionist Reserve and Fannie Mae / Mac are entirely, not partly, but 100% the cause of this financial disaster. The risky actions of the financial institutions were a result of the loose money environment created by the forementioned agencies, thus the recklessness in the lending market was an effect, not a cause. That which is an effect of a problem can't logically be held as the primary cause, an exascerbator yes, but not the true source. Those who blame the free market for the current financial situation take a stunningly anti-intellectual position. Banking, at least in the U.S., is among the most heavily government-controlled and collusionist "industries" of all; it is the polar antithesis of a free market. Duh. Were it not for manipulation of interest and the money supply by a government controlling a fiat currency, competitive market forces would establish the cost of money to levels of risk averting reckless behavior in the first place, on both the supply and demand side, regardless of the financial instruments or industries involved. Forget the unprincipled illogicisms and scare-mongering lies to protect political and government-connected parasites, whether in government or industry. Forget government bailouts or favoritism of any kind in any amount to anyone at any time for any reason; they're all destructive. See http://mises.org/story/3131

  • Laura - Wednesday, October 1, 2008, 7:51PM ET  Report Abuse

    • Overall: 5/5

    I doubt that the government is going is going to get much of this 700 billion back. You have to wonder how the federal government's credit rating will fare a year from now.

  • PK - Wednesday, October 1, 2008, 10:46AM ET  Report Abuse

    • Overall: 1/5

    This abomination is going to purchase more than Mortgage Backed Securities. The language in the bill allows Paulson to buy whatever he deems neccesary to "protect" the economy. It's the "derivetives" that have the Big Boys soiling themselves. There are no underlying assets. Period. They were essentially "bets" made on the performance or non performance of the Bonds/Securities. Every one was so sure positive that they were betting on a "sure thing" that they borrowed the money to make the "bets" and didn't have enough money to "pay up" if they lost. They are PURE LIABILITY. By some Financial alchemy they have a notional value that is MULTIPLES of the assets underlying the original securities. There are credible estimates that they have HUNDREDS OF TRILLIONS of notional value. That is more than the annual GDP of the ENTIRE PLANET. In the real world this is when your bookie's boy, Vinnie, is coming to break your knee caps and all the fools that loaned you the money to "bet" on a "sure thing" are after what is left of your hide. $700 billion as like saying you can bail out the ocean with a SOUP SPOON.

  • Yahoo! Finance User - Wednesday, October 1, 2008, 8:40AM ET  Report Abuse

    • Overall: 2/5

    If Congress were sincere in its objectives, it would *not* be spending our grandkids' money buying *old* loans at inflated prices from Paulson's and Pelosi's friends. Perhaps, they'd guarantee $100B of *new* loans, but only after ensuring transparency, read "marked-to-market," by banks and others.

  • DG - Tuesday, September 30, 2008, 11:32PM ET  Report Abuse

    • Overall: 4/5

    This bailout plan simply changes ownership of these real estate loan. How will this be beneficial ? No one is looking to borrow anyway, and businesses that are arent doing so to expand and add jobs. The economy is what it is, and we need to build from the bottom up. We need to come up with a soution that focuses on consumers. Consumers are responisble for 2/3rds of what drives the economy. If this bill passes as it is, it is Government Theft. Raising fdic to 250 ik is an empty give back.

  • motu c - Tuesday, September 30, 2008, 8:47PM ET  Report Abuse

    • Overall: 3/5

    I remember how the Bush administration pushed the Iraq war on us. The congress was sleeping as usual and rubber stamped the Iraq invasion. The media was acted as cheer leaders for this unnecessary war. Lastly Powell was the pitchman for that fiasco. Now this same administration is screaming over our financial hiccup congress is already lined up blindly behind this and the media is doing its bit by spreading doom and gloom for main street, only thing diffirent is the pitchman its Paulson. I think it'll be better financially for us if the banks tighten the credit market as un credit worthy people will not borrow money for things they don't need which will free up funds for small businesses, who'll in turn expand and hire more. This "meltdown" is a blessing in disguise. Let the losers lose.

  • Yahoo! Finance User - Tuesday, September 30, 2008, 2:06PM ET  Report Abuse

    • Overall: 3/5

    Is it possible, JUST POSSIBLE, that if we were to allow the economy to work through this adjustment/recession/depression/plunge into the abyss/whatever you want to call it, and WE THE PEOPLE were forced to work through it as well, that in the long run we'll all be better off for it? Let's just suck this up and get it over with already; we're prolonging the inevitable with this bailout. Does it not seem a little strange that a government that is notoriously slow to do even the most miniscule of tasks has seemingly pulled out of nowhere a massive sweeping plan to "fix" all of this? It's not hard to see we've all "forgotten where we came from." Let the chips fall where they may. The ones really pushing this bailout are the ones who have never had to scrap for anything in their lives. The real workers of the world will do just fine, thank you very much.

  • CarlosI - Tuesday, September 30, 2008, 11:36AM ET  Report Abuse

    • Overall: 2/5

    This article was useless; thanks Mick for not taking a stance or adding one ounce of insight. As for Jeff Matthews, he should be banned from blogging for not getting his facts straight. Buffett didn't invest in GS based on the premise of it solely being a good value. Buffett invested with the presumption Congress would pass the bill because it is a NECESSITY. Here you go Mr. Mathews, in case you missed it... Buffett said the plan "is absolutely necessary, in my view, to really avoid going over the precipice."

  • Gee - Tuesday, September 30, 2008, 10:44AM ET  Report Abuse

    • Overall: 3/5

    Posted 9-30-08: The big banks and big brokerage houses "need" this bailout? The credit markets will "freeze up"? This weekend Citibank paid $2.2 billion to acquire WaMu's supposedly toxic inventory of mortgages! $2.2 billion! That would have been $44 billion in new loans at the 20-to-1 leverage on capital to assets permitted by the regulators. And Bank of America bought Merrill Lynch ... and on an on -- with BILLIONS of dollars changing hands. I am SURE that all of those bank and brokerage executives making salaries of tens of millions of dollars each year are COUNTING on the politicians to buy all of the bad paper that THEY created -- so that they can continue to make their huge profits and salaries. And who picks up the tab? The taxpayers -- most of whom make less than $50,000 per year. And this isn't the first rip off -- the government has already committed hundreds of BILLIONS in taking over Fannie Mae and Freddie Mac, and billions more in various bank closures/mergers and special lending programs. AND, it probably won't be the last time that they come back for MORE "urgently needed" programs in the billions of dollars. Who decides? Politicians that get their pockets stuffed with money from the lobbyists of the banks and brokerages! Time for the taxpayers to howl "ENOUGH!" Time for the hotshots making those 8-figure salaries to JUSTIFY those salaries and figure out on there own how to make the securities and market that THEY CREATED work.

  • Olivia - Tuesday, September 30, 2008, 10:28AM ET  Report Abuse

    • Overall: 5/5

    Do not be fooled. The $700 billion (ultimately $1 trillion or more) bailout is not predominantly for mortgages and homeowners. Instead, the bailout is for mortgage-backed securities. In fact, some versions of these instruments are imaginary derivatives. These claims overlap on the same types of mortgages. Many financial institutions wrote claims over the same mortgages, and these are the majority of claims that have "gone bad." At this point, such claims have no bearing on the mortgage or housing crisis; they have bearing only on the holders of these securities themselves. These are ridiculously risky claims with little value for society. It is as if many financial institutions sold "earthquake insurance" on the same house: when the quake hits, all these claims become close to worthless — but the claims are simply bets disconnected from reality. Follow the money. Average Joes and Janes are not the holders of the other side of complicated, over-the-counter derivatives contracts. Rather, hedge funds are the main holders. The bailout will involve a transfer of wealth — from the American people to financial institutions engaging in reckless speculation — that will be the greatest in history. Rescuing financial institutions is not the best solution. Yes, banks are needed to provide capital to businesses. But it is not necessary to spend $1 trillion to maintain liquidity. If the government is to intervene, it should pick and choose which claims to purchase; claims that are directly tied to mortgages would be a good start. Let financial institutions fail, merge or be bought out. The faltering institutions will see their shares devalued and will be likely to be taken over by stronger institutions — as has already started happening. This consolidation of the financial sector is both efficient and inevitable; government action can only delay the adjustment. The government should not intervene. It should leave overleveraged financial institutions to default on their derivatives obligations and, if necessary, file for bankruptcy. Much of the crisis has arisen from miscalculating the risks involved in a large book of positions in these derivatives. It is only logical that these institutions pay for their poor management. Rather than bailing out Wall Street, we propose that the government should buy up the actual mortgages in question and do nothing else. The government should not touch any derivatives; that is, claims that do not directly tie into the actual mortgages. If money becomes too tight, then the Fed can certainly increase its loans to financial institutions. Let the poorly managed, overly risk-taking financial institutions fail! Always remember that Wall Street and the real economy are not the same thing.

  • Yahoo! Finance User - Tuesday, September 30, 2008, 9:53AM ET  Report Abuse

    • Overall: 5/5

    Job number one for congress -- and all elected officials -- is to prop up the stock market! If they had just passed this bill the DOW would be on course to blow past 15K in no time and happy days would once again visit these shores. Prop up house prices! Prop up the stock market! Levitation is the key!

  • d d - Tuesday, September 30, 2008, 9:51AM ET  Report Abuse

    • Overall: 5/5

    today, the dollar is trading against the euro at the highest level since last february. i'd say the bailout rejection might just be a good thing

  • JimH - Tuesday, September 30, 2008, 9:13AM ET  Report Abuse

    • Overall: 2/5

    What SHOULD be added is a 15% congressional pay cut. After all, congress got us in this mess, they expect us to pay, the should as well.

  • Steve - Tuesday, September 30, 2008, 4:22AM ET  Report Abuse

    • Overall: 1/5

    So the republicians think they are saving the "tax payers". Well I'm a middle class tax payer and you retards who know nothing about how markets work nor appreciate the seriousness of the situation, just cost me 8 times what I would have ever paid in taxes to correct this problem. Also don't forget it was the retards who bought $400K homes with $40K/year jobs. The american people created this mess and should be held accountable thru their tax payments. Blaming "big banks CEOs" is a cop out and BS. Good thing you people saved the "tax payer" who will now pay for this mess thru his retirement accounts, children's college fund, and home value (which the tax payer still has to pay his mortgage on the $400K house which is now worth $250K in he is lucky). Really stupid. Yeah, save the "tax payer"

  • Yahoo! Finance User - Tuesday, September 30, 2008, 3:17AM ET  Report Abuse

    • Overall: 3/5

    Any bail-out is bad for long term...I am amazed about these so called financial experts who are ringing the bells for bail out...why not let the market decide what is a fair value of assets? It is painful, but better get through the pain now than burden our next three generations with pain and poverty!

  • Nik - Tuesday, September 30, 2008, 1:00AM ET  Report Abuse

    • Overall: 5/5

    Nice summary of views. Waldman, Yves Smith, and David Merkel are right, and I am glad that the US Congress has stopped this foolish rush. As US Rep Ted Poe pointed out, Congress spent more time on the baseball scandal than on this huge mess. Putting the brakes on, exploring other options, and making a deliberate decision would be best for this country. Do not let the experts hold a gun to your head and force you to make a rash decision that is against the principles of capitalism.

  • Jiggz D - Monday, September 29, 2008, 11:32PM ET  Report Abuse

    • Overall: 1/5

    It's about time we face our enemy! Indebtedness! Game's over! We need to start all over again. Those liberal DEMS who thinks money grows on trees and printing presses will have a rude awakening. The DEMS game of "piggy-backing" earmarks need to stop. So DJ lost $1T today which is more than $400B than the bail out price, but at least it didn't end up into greedy fat cats' pocket! NO BAIL OUT! LEND THEM MONEY AT 2% IF THEY WANT TO STAY LIQUID BUT NEVER FREE MONEY!

  • Stewey - Monday, September 29, 2008, 9:41PM ET  Report Abuse

    • Overall: 1/5

    You miss the true mark, yeah the market tanked today; but everyone knows the "bailout" will get passed and now all of those suckers on wall street will be lining their fat pockets with more money by the end of the week when the market rebounds.

  • Nam - Monday, September 29, 2008, 9:39PM ET  Report Abuse

    • Overall: 2/5

    McCain three years ago wanted to regulated Fredie Mac and Fannie Mae but Democrats stubbornly opposed Republicans a insisted that there is nothing wrong with those institutions. Now Liberal Nancy Pelosi is playing political points by whining and blaming the Republicans for the failed bail-out, forgetting to mention that the majority of American people oppose this bail-out and Democrats added earmarks into this bail-out bill.

  • Richard - Monday, September 29, 2008, 9:35PM ET  Report Abuse

    • Overall: 3/5

    The american people are a buch of idiots. They railed congress not to pass the "bailout". The stock market lost a trillion or about 400 million more than the bailout and the dows heading for 8000. With the banks hosed up these same "clowns" who screamed "no" are going to be out of work because there is no credit to keep business going. Plus there 401ks will be 35% down because they failed to understand what the bailout was (not the fancy money handout obama has made it).

  • Yahoo! Finance User - Monday, September 29, 2008, 9:03PM ET  Report Abuse

    • Overall: 1/5

    Mick says "In times of turmoil, if you want straightforward, informative commentary unencumbered by journalistic conventions, turn to smart bloggers." Only one problem with that quote. I knew that this situation was waiting in the wings to begin with. Back in 2003, as a banker, I saw the bank I worked with, forcing us to push people in all sorts of loans, credit, auto etc. In fact, the bank that backed up those loans, failed just last week (WAMU), and as a banker we had this acronym that was KYC (which wasn't the Dow Symbol for a fried chicken company), it was simply "Know Your Customer." What the industry basically fed us, was to Know not what your customer is like or needs, just throw them a line of credit, regardless of whether or not they had a job or not. Now that I have become more savvy about blogging, and had told this story that I could see this mess happening back in 2003 (In fact, early last year I had made the same statements), and the so-called "smart bloggers" that hang around Yahoo Finance, beat me up several times over. In fact, they even complained to Yahoo, and took my posts off. Just because they didn't agree with me. I often wonder where they are now? Were the forclosed upon, got laid off? Then to add to all this, is the people who are bashing the Democrats over this issue, because Speaker Pelosi basically came out and said that our Lame Duck President was all behind this over his 7 3/4 years in office? First, Speaker Pelosi pushed this bailout with more votes than Bush did with his own party. The House GOP caucus stood Bush up big time. As I have said it dating back to last year..(and Pelosi said it best)...THE PARTY IS OVER. Get used to it. While I am not in agreement as to this bailout, and the usage of taxpayer dollars in this case, I do think that a take over of those firms involved in this mess, and basically forgiving those forclosed in this mess of their debt is a good start. After all, when an administration deregulates the mortgage lending/credit industry like it has, and gives what amounts to bad loans, it is usually called LOANSHARKING. Memory serves me right this country puts people in jail for LOANSHARKING. But the sheeple who write in these blogs basically tell the victims, "if you were dumb enough to buy into this, it's your fault, not the government." If we go with that philosophy, then we can make murder, and manslaughter legal. After all, if you the victim were dumb enough to be in a situation like that...you get what you deserve. This is the type of people who wrote in these blogs for the last year. Their idea that this is free enterprise, get government out of our way, and when it fails, bail us out taxpayers! BOTTOM LINE: Wake up people, the criminal acts of these firms who created this mess should be put out of business, and the bad loans that were created, should be taken for a loss, and given to the customer. If Wall Street acts like they can get away with murder (in business terms), they will. They gave millions to the GOP, and the GOP gave them license to do as they please. Wall Street failed, and they want a Bailout from taxpayers, but the GOP is hurting with a bad economy, and they won't win in November with a taxpayer bailout. This time around, Wall Street got caught by the taxpayers, and the GOP won't fall all overthemselves to bail them out. Time for them to be held hostage by Congress, shake Wall Street upside down, put them out of business, and give the taxpayers laden with the debt their homes. Wall Street thought the taxpayer was gonna snooze and lose. Too bad, you lose Wall Street, time to pay up for your excesses, and leave the taxpayer alone. Otherwise, everyone will lose, the GOP, and Wall Street. The two groups that created the mess!

  • Yahoo! Finance User - Monday, September 29, 2008, 8:34PM ET  Report Abuse

    • Overall: 3/5

    Bush's days in office are numbered. All kinds of panic and hell will break loose in order to pave the way for the One World Government.

  • Nemo - Monday, September 29, 2008, 8:07PM ET  Report Abuse

    • Overall: 5/5

    Ah ... you gave me the one item I needed: that the current plan has the taxpayers paying the maturity value price, not the market value. Didn't the first deal, which fell apart, have the market value price? Try, try again, Uncle Sam.

  • Yahoo! Finance User - Monday, September 29, 2008, 6:21PM ET  Report Abuse

    • Overall: 1/5

    It very easy to say to talk or write in generalities. How about offering some alternatives? Otherwise, it's clear these 'experts' aren't experts at all.

  • Rory - Monday, September 29, 2008, 6:13PM ET  Report Abuse

    • Overall: 5/5

    The fact of the matter is that our generations, baby boomers and below, caused this mess. It is not our childrens responsibilty - or shouldn't be - to clean up our mess. If a bailout is passed, it will be hundreds of billions of dollars in debt in which we have no intention of paying off in our lifetimes. Therefore, we are leaving the problem to future generations. Combine this with the fact that no one on wall street, capital hill, or any respect economist will say that they think this thing will actually bring the economy out of the downward slide, and you can see why this shouldn't be passed. Long story short it is our mess and we need to live with the consequenes. The time has come to be an adult, and stand up for what is right instead of what is easy.

  • CC - Monday, September 29, 2008, 5:35PM ET  Report Abuse

    • Overall: 1/5

    if you bail all tax-paying americans out directly by dividing 700B among all , i think it is better!

  • Marlena - Monday, September 29, 2008, 5:30PM ET  Report Abuse

    • Overall: 3/5

    It's not all about "me". It seems that everyone is getting screwed. It was smart for the House to deny the bailout because that is not the root cause. These companies need to bail themselves out and change their interest rates so they get paid...Like our health, taking a pill will only cause side effects and most likely not cure anything. Get to the bottom of this problem, even if it hurts and takes a bit longer, and cure the root not the symptom!

  • MiltonF - Monday, September 29, 2008, 5:30PM ET  Report Abuse

    • Overall: 1/5

    I give a standing ovation for the House in defeating the Bush bailout. The Bush adminstration has from the start used scare tactics (Iraq war, stimulus package etc.). Passing the bailout would have given the message that companies are not accountable for their actions. The finacial companies got into their mess by greed from making sub-prime loans. They should be held responsible. I never for a moment believed that the taxpayers should be required to pay for the greed and irreponsibility of the financial companies. We can ill afford another $700 added to the national debt. What happened to accountability?

Showing comments 6-35 of 221<< PreviousNext >>

Recent Articles by Mick Weinstein

View all articles from Mick Weinstein

More from Seeking Alpha

The Leading Provider of Stock Market Opinion and Analysis

Seeking Alpha is the leading provider of stock market opinion and analysis from blogs, money managers, and investment newsletters, and a producer of its own financial content on market-moving news developments.

Read more from Seeking Alpha here.

More from Yahoo! Sources

  • CNN Money
  • Consumer Reports
  • Kiplinger
  • The Motley Fool
  • Business Week
  • Wall Street Journal

Historical chart data and daily updates provided by Commodity Systems, Inc. (CSI). International historical chart data and daily updates provided by Morningstar, Inc. Fundamental company data provided by Capital IQ. Quotes and other information supplied by independent providers identified on the Yahoo! Finance partner page. Quotes are updated automatically, but will be turned off after 25 minutes of inactivity. Quotes are delayed at least 15 minutes. Real-Time continuous streaming quotes are available through our premium service. You may turn streaming quotes on or off. All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.

Yahoo! Answers is provided for informational purposes only, and no Q&A is intended for trading or investing purposes. Yahoo! shall not be responsible or liable for the accuracy, usefulness or availability of any Q&A information, and shall not be responsible or liable for any trading or investment decisions based on such information. View Complete Answers Disclaimer.