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Bailout failure | World headed for another Great Depression?
Posted 10/1/08
Bailout vote stuns Washington, markets
Dow suffers record loss; world stocks plunge; Bush, House to try again

Rep. Barney Frank, D-Mass., chairman of the Financial Services Committee and a leading negotiator in crafting the compromise bill, blamed breakaway Republicans for killing the plan.

By Alex Johnson
Reporter
MSNBC
updated 8:33 p.m. ET, Mon., Sept. 29, 2008

World financial markets reeled as stunned lawmakers groped for their next move Monday after House Republicans abandoned President Bush in droves to help kill his $700 billion proposal to rescue the financial services industry.

Even before the vote was announced, stocks began tanking on Wall Street. The Dow Jones Industrial Average nose-dived by more than 777 points, its worst fall ever, in a sell-off that swept markets around the globe.

As fears rose that the credit crisis was spreading, Asian and European markets closed sharply down, and governments in at least eight European countries took steps to begin rescuing large banking institutions.

Democrats and Republicans argued bitterly over who was at fault for the 228-205 vote that torpedoed a compromise bailout plan that would have allowed the Treasury Department to buy up toxic assets from struggling banks.

Lawmakers shouted news of the plummeting Dow as they crowded on the House floor during the roll call, which dragged on for roughly 40 minutes as leaders on both sides scrambled to corral enough of their rank-and-file members to support the deeply unpopular measure.

Ample “no” votes came from both sides of the aisle, but Democratic leaders managed to persuade more than 60 percent of their members to back the measure, while more than two-thirds of Republicans balked at spending so much taxpayer money just before the Nov. 4 elections.

The House canceled plans for a pre-election recess and was scheduled to reconvene Thursday, although no plan of action had yet been worked out.

Bush vows to keep working

Republicans defend 'no' votes

Overseas markets plunge

‘Can’t see what the upside is’


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Bailout failure throws banks into disarray
Fear, uncertainty about mounting losses threatens global economy

ANALYSIS
By John W. Schoen
Senior producer
MSNBC
updated 9:30 p.m. ET, Mon., Sept. 29, 2008

The failure of a massive $700 billion bailout financial plan Monday removes a critical firewall intended to keep the credit market collapse from spilling over into the global economy.

But even if the plan is somehow revived, cracks are beginning to widen in the foundations of the global banking system.

Aftershocks from the ongoing credit crisis struck again Monday, with the forced marriage of Wachovia and Citigroup and the nationalization of several European banks.

The latest reverberations come just days after regulators seized the assets of Washington Mutual, which was losing ground to mounting writedowns on mortgage-related investments, and found a buyer in JPMorgan Chase. It was the largest bank failure in U.S. history.

Continued...


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Most Asian markets recover on bailout hope
Optimism $700 billion financial rescue will gain legislative approval

A pedestrian walks past a digital stock indicator in Tokyo on Wednesday.

updated 11:01 a.m. ET, Wed., Oct. 1, 2008

TOKYO - Most Asian markets bounced back Wednesday on hopes that a $700 billion bailout for the U.S. financial system will soon win legislative approval, although doubts persisted about the outlook for the global economy.

Japan’s Nikkei 225 index, the benchmark for Asia’s biggest bourse, gained 108.40 points, or 1 percent, to close at 11,368.26. On Tuesday, it plunged 4.1 percent to its lowest in more than three years on disappointment that the U.S. House of Representatives had rejected the bank rescue package.

Australian stocks rallied, with the benchmark S&P/ASX-200 index jumping 4.2 percent after sinking 4.3 percent Tuesday. Markets in Taiwan and India also gained.

Continued...


=================================================End of Article

Pro or con, readers decry lack of leadership
Rejection of massive bailout brings legislators harsh criticism from all sides

From right to left, Rep. Barney Frank, D-Mass., House Speaker Nancy Pelosi, D-Calif., and House Majority Leader Steny Hoyer, D-Md., take questions at a news conference after the House rejected a $700 billion Wall Street bailout.

By Kari Huus
Reporter
MSNBC
updated 10:14 a.m. ET, Tues., Sept. 30, 2008

It was difficult to tell who howled louder Monday when a $700 billion bailout package for Wall Street crumbled — those who were terrified by the failure of the package or those horrified that the massive economic life-saver came within 23 votes of passage.

Readers who wrote to msnbc.com’s Gut Check America as the drama unfolded—more than 3,000 on Monday alone — agreed on one thing: The vote clearly demonstrated a lack of leadership in the Capitol. Some heaped blame on Wall Street players and politicians, saying they were complicit in the economic mess, while others derided Congress alone, saying that lawmakers are too spineless to pass the taxpayer-funded bailout in the run-up to elections.

Continued...


=================================================End of Article

What the World thinks of the U.S. Financial Crisis

Shades of Schadenfreude
As the United States wallows in the worst financial crisis since the Great Depression, the world looks on with horror, fear and sometimes guilty pleasure.
Newsweek Web Exclusive
Sep 30, 2008 | Updated: 2:26 p.m. ET Sep 30, 2008

Rarely does an event capture the world's attention as the American financial crisis has in the past few days. In Mexico, they're calling it the "American FOBAPROA," an echo of that country's infamous 1994 bailout fund. In Beijing, many are hoping it will chasten China's free-spending materialists. In France, President Sarkozy views it as a vindication of heavy-handed government policies. The crisis, which has caused the spectacular failure of storied banks like Lehman Bros. and Wachovia, and probably more to come, hasn't caused a global financial meltdown (yet). But its effects are being felt on minds and pocketbooks around the world. Here—from our correspondents in Britain, France, China, Germany, South Korea and Japan—are glimpses of the international reaction to the panic on Wall Street.
—Barrett Sheridan

Britain: Rooting for the rescue plan.

France: The bailout is 'profoundly revolting.'

China: 'We will make the same mistakes.'

Germany: 'The crisis is far away.'

Japan: Critical of 'U.S. style capitalism'

South Korea: Mixed feelings.


=================================================End of Article
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24 / M
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Posted 10/1/08
you know, if bush wasnt our dictator, i mean president, this would probably been avoided.
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27 / M / Bermuda Triangle
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Posted 10/1/08
Free market depends on the faith of the people. Like during the Great Depression, people got scared about the economy and everyone immediately bought out their stocks.
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Posted 10/1/08
Great Thread! *thumbs up* Hope you edit and add any latest infos.

This is the time that America need to take this matter seriously. I fear depression, i hope they come out with another plan instead of the current rejection of bailout plan.


Posted 10/1/08
@ azera - I somehow doubt you actually read this, but that's okay.

I forgot to post my own standpoint on this, and well... I guess I'm still thinking about a lot of things. I'll edit this post when I'm fully sure of my opinion.

I hope people with a lot to say come to this thread, there's a lot I want to hear. I like reading Mauz15's posts, something as long as that.
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Posted 10/1/08 , edited 10/1/08
Azera has no idea what this Bailout plan is actually trying to accomplish. Good for pointing it out zen, but here's why no matter what revisions they make........Bailout or NO Bailout, we're all screwed.

With Bailout Plan:
The average middle-class American taxpayers, such as myself or your parents' if you're not of legal age WITH a job, will end up PAYING OFF the government to buy these "unliquidated" assets from the bankrupted companies.
- In other words, our taxes will increase @ an enormous rate as the middle-class average American (myself) will have to BAIL OUT the high-class, rich IDIOTS that caused the global market to become screwed up in the first place. Moreover, NOT A DAMN THING happens to these rich fools because they can sleep happy @ night while WE SUFFER.

Without Bailout Plan:
Companies go bankrupt............no need to explain further except with one word
-DEPRESSION

We're in a Catch 22 scenario right now thanks to those rich monkeys that don't know that it's safer to invest WITHOUT using credit.

The question is, what the hell would you rather live with?
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22 / M / SPARTAAAAAAAAAAAA...
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Posted 10/1/08
(puts up flame sheild) how could the u.s. create a global depression?
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Posted 10/1/08

Tyrant_wiener2 wrote:

you know, if bush wasnt our dictator, i mean president, this would probably been avoided.


Well, I’m a political science major, and I’m afraid you’re not entirely correct. Bush’s hands aren’t entirely clean, but we can’t just blame him.

First off, the president cannot influence the economy except where Congress allows him. The president doesn’t pass laws or bills, congress does. The president simply makes suggestions which are then reviewed by Congress. Congresses chooses rather or not the law is passed.

This being said, the suggestions made by the Clinton administration are more responsible for this than those made by the current Bush administration-which has been primarily focused on external affairs such as the war and diplomacy. In other words, Bush isn’t directly responsible for any of our economic issues.

Now, he has increased American debt by funding the war. However, America was in debt before he got into office. Moreover, as our first secretary of treasury Alexander Hamilton pointed out, international debt is a good thing. I know that sounds shocking, but whenever other nations make investments they protect them. By lending America money foreign nations are investing in America and have to protect that investment.

Why do you think Australia follows us like a chick follows its mother? Seriously, what business does Australia have in Iraq except through America?

Bush is responsible for our failures in Iraq, but not on home-ground. At least not directly or entirely. Congress I just as much to blame, and so is Bill Clinton, Mortgage Brokers, and various others. It’s a multilayered screw up largely resulting from general irresponsibility from republicans AND democrats.
Posted 10/2/08
Even if the bailout passes, my question is, will it really help our economy? From what I've read at CNN, Yahoo, and some other news sites, our economy is going to get much worse before it ever gets better. My main concern is if all of the credit dries up in our bank institutions, how the hell I am going to pay for school? How are people, like me, that aren't super rich supposed to finance their educations, their homes, their lives. We are a credit-based country. No Credit = Zero US economy.

This whole situation just makes me sick to my stomach. It's starting to sound like we're damned if we do, damned if we don't. Like B.G said, it definitely is a Catch 22.

Oh and fun fact that's unrelated, I heard on the radio this morning that the ticker in NY that shows the amount of US debt is running out of spaces. The people who created it apparently thought that 10 trillion dollars of national debt would be unthinkable. Well, we are well on our way. I would post the exact amount that we're at, but the online version is down. Go figure.


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Posted 10/2/08 , edited 10/2/08
http://www.charlierose.com/shows/2008/09/29/1/an-update-on-the-economy

(as with any discussion about this, filter out the bias)
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Posted 10/2/08

zen_music wrote: Democrats and Republicans argued bitterly over who was at fault for the 228-205 vote that torpedoed a compromise bailout plan that would have allowed the Treasury Department to buy up toxic assets from struggling banks.


Just about everyone was at fault. You see, our economy is-like every other aspect of our government-subject to checks and balances. It’s extremely complicated and no one person or party can ruin it by his/her/themselves. It requires a lot of large scale cooperation from democrats and republicans from all over the place. Fact Check provides a happy little list of people to point fingers at:
• The Federal Reserve, which slashed interest rates after the dot-com bubble burst, making credit cheap.
• Home buyers, who took advantage of easy credit to bid up the prices of homes excessively.
• Congress, which continues to support a mortgage tax deduction that gives consumers a tax incentive to buy more expensive houses.
• Real estate agents, most of whom work for the sellers rather than the buyers and who earned higher commissions from selling more expensive homes.
• The Clinton administration, which pushed for less stringent credit and downpayment requirements for working- and middle-class families.
• Mortgage brokers, who offered less-credit-worthy home buyers subprime, adjustable rate loans with low initial payments, but exploding interest rates.
• Former Federal Reserve chairman Alan Greenspan, who in 2004, near the peak of the housing bubble, encouraged Americans to take out adjustable rate mortgages.
• Wall Street firms, who paid too little attention to the quality of the risky loans that they bundled into Mortgage Backed Securities (MBS), and issued bonds using those securities as collateral.
• The Bush administration, which failed to provide needed government oversight of the increasingly dicey mortgage-backed securities market.
• An obscure accounting rule called mark-to-market, which can have the paradoxical result of making assets be worth less on paper than they are in reality during times of panic.
• Collective delusion, or a belief on the part of all parties that home prices would keep rising forever, no matter how high or how fast they had already gone up.
[url ]http://www.business.cch.com/bankingfinance/focus/news/Subprime_WP_rev.pdf
http://knowledge.wharton.upenn.edu/article.cfm?articleid=1824
http://www.gao.gov/new.items/d051009sp.pdf
http://knowledge.wharton.upenn.edu/article.cfm?articleid=1824
http://thehill.com/leading-the-news/clinton-rejects-blame-for-financial-crisis-2008-09-25.html
http://www.pbs.org/newshour/bb/business/july-dec08/econtrouble_08-20.html
http://www.federalreserve.gov/boarddocs/speeches/2004/20040223/
http://www.pbs.org/newshour/bb/business/july-dec08/econtrouble_08-20.html
http://www.iht.com/articles/2008/09/20/business/prexy.php
http://www.consumeraffairs.com/news04/2008/07/mark_to_market.html
http://www.business.cch.com/bankingfinance/focus/news/Subprime_WP_rev.pdf
http://www.factcheck.org/elections-2008/who_caused_the_economic_crisis.html
http://www.qjae.org/journals/qjae/pdf/qjae1_1_1.pdf
http://www.prospect.org/cs/articles?article=the_bubble_economy
http://banking.senate.gov/conf
http://www.businessweek.com/magazine/content/08_40/b4102000409948.htm
http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,1,0,0,0,0,0.html
http://www.gao.gov/new.items/d051009sp.pdf
http://www.business.cch.com/bankingfinance/focus/news/Subprime_WP_rev.pdf
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Posted 10/2/08
The funny thing is we still have no oversight over the Federal Reserve at all they work completetly independant from our government. Let me restate this the people who ISSUE our money we have NO oversight over. The fed who can set our interests rates, print up more dollars increasing inflation tax, (Alan greenspan creating the bubbles by keeping interests rates artificially low encourging risky loans) zero audits. Now I have to believe the Bernake and Henry Paulson idea to buy up this bad debt to help the economy but what is odd is the time they decided to do this right at elections and the failure of congress or these 2 presidents for coming up with any alternatitive solution to this. I was very happy when this got defeated on monday and hopefully it gets defeated on Friday. To get $700 billion we going to have to lol borrow money from the banks and issue the money to the banks but we are charged interest for this. Why o why do we keep allowing the fed to increase inflation and debase the currency with no supervision is beyond me.
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Posted 10/2/08 , edited 10/2/08


just today, i looked at the guiness world record 2008, and America has the biggest national debt, about a couple trillion, i think it was 9 trillion, my friend wrote down a link to the treasury. like you said(or the secretary of treasury) its a good thing, and yet we're at a crisis, bush on the other hand, what has he accomplished?, i'll show you a list(got it from a websitem, which might not be true) of his accomplishment. read his accomplishment, if dont know if you agree or not, but uh, some of them look like dictatorship. (BTW this was in a 'what bush's resume would look like')


Attacked and took over two countries.

Spent the surplus and bankrupted the treasury.

Shattered record for biggest annual deficit in history.

Set economic record for most private bankruptcies filed in any 12 month period.

Set all-time record for biggest drop in the history of the stock market.

First president in decades to execute a federal prisoner.

First president in US history to enter office with a criminal record.

First year in office set the all-time record for most days on vacation by any president in US history.

After taking the entire month of August off for vacation, presided over the worst security failure in US history.

Set the record for most campaign fund-raising trips than any other president in US history.

In my first two years in office over 2 million Americans lost their job.

Cut unemployment benefits for more out of work Americans than any president in US history.

Set the all-time record for most foreclosures in a 12 month period.

Appointed more convicted criminals to administration positions than any president in US history.

Set the record for the least amount of press conferences than any president since the advent of television.

Signed more laws and executive orders circumventing the Constitution than any president in US history.

Presided over the biggest energy crises in US history and refused to intervene when corruption was revealed.

Presided over the highest gasoline prices in US history and refused to use the national reserves as past presidents have.

Cut healthcare benefits for war veterans.

Set the all-time record for most people worldwide to simultaneously take to the streets to protest me (15 million people), shattering the record for protest against any person in the history of mankind. (http://www.hyperreal.org/~dana/marches/)

Dissolved more international treaties than any president in US history.

My presidency is the most secretive and un-accountable of any in US history.

Members of my cabinet are the richest of any administration in US history. (the 'poorest' multi-millionaire, Condoleezza Rice has an Chevron oil tanker named after her).

Had more states to simultaneously go bankrupt than any president in the history of the United States.

Presided over the biggest corporate stock market fraud of any market in any country in the history of the world.

Created the largest government department bureaucracy in the history of the United States.

Set the all-time record for biggest annual budget spending increases, more than any president in US history.

First president in US history to have the United Nations remove the US from the human rights commission.

First president in US history to have the United Nations remove the US from the elections monitoring board.

Removed more checks and balances, and have the least amount of congressional oversight than any presidential administration in US history.

Rendered the entire United Nations irrelevant.

Withdrew from the World Court of Law.

Refused to allow inspectors access to US prisoners of war and by default no longer abide by the Geneva Conventions.

First president in US history to refuse United Nations election inspectors (during the 2002 US elections).

All-time US (and world) record holder for most corporate campaign donations.

My biggest life-time campaign contributor presided over one of the largest corporate bankruptcy frauds in world history (Kenneth Lay, former CEO of Enron Corporation).

Spent more money on polls and focus groups than any president in US history.

First president in US history to unilaterally attack a sovereign nation against the will of the United Nations and the world community.

First president to run and hide when the US came under attack (and then lied saying the enemy had the code to Air Force 1)

First US president to establish a secret shadow government.

Took the biggest world sympathy for the US after 911, and in less than a year made the US the most resented country in the world (possibly the biggest diplomatic failure in US and world history).

With a policy of 'dis-engagement' created the most hostile Israeli-Palestine relations in at least 30 years.

Fist US president in history to have a majority of the people of Europe (71%) view my presidency as the biggest threat to world peace and stability.

First US president in history to have the people of South Korea more threatened by the US than their immediate neighbor, North Korea.

Changed US policy to allow convicted criminals to be awarded government contracts.

Set all-time record for number of administration appointees who violated US law by not selling huge investments in corporations bidding for government contracts.

Failed to fulfill my pledge to get Osama Bin Laden 'dead or alive'.

Failed to capture the anthrax killer who tried to murder the leaders of our country at the United States Capitol building. After 18 months I have no leads and zero suspects.

In the 18 months following the 911 attacks I have successfully prevented any public investigation into the biggest security failure in the history of the United States.

Removed more freedoms and civil liberties for Americans than any other president in US history.

In a little over two years created the most divided country in decades, possibly the most divided the US has ever been since the civil war.

Entered office with the strongest economy in US history and in less than two years turned every single economic category heading straight down.
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Posted 10/2/08 , edited 10/2/08

Tyrant_wiener2 wrote:
just today, i looked at the guiness world record 2008, and America has the biggest national debt, about a couple trillion, i think it was 9 trillion, my friend wrote down a link to the treasury. like you said(or the secretary of treasury) its a good thing, and yet we're at a crisis, bush on the other hand, what has he accomplished?, i'll show you a list(got it from a websitem, which might not be true) of his accomplishment. read his accomplishment, if dont know if you agree or not, but uh, some of them look like dictatorship. (BTW this was in a 'what bush's resume would look like')


Well, I’m not so certain about your source. However, rather or not it’s accurate doesn’t matter. We actually agree in that both of us dislike George W. Bush as a president. Don’t get me wrong, I think Bush does what he thinks is right. He’s true to himself and his merits, and by his merits he’s a great person. This being said, he’s a miserable leader.

I think Bush is an ego maniac. I think we spend millions of dollars in taxes to support his advisors in the cabinet, and yet he completely ignores their advice. While I think that, given the information available at the time, his choice to go to war was sagacious, I hate how he’s run the war since then.

In addition, I think his lack of charisma and eloquence is the most humiliating thing for America since Bill Clinton got head in the white-house.

This being said, as much as I’d like to blame Bush for the current crises, it’s not his fault. At least not entirely. Bush is partially at fault, but not so much as Clinton. Besides, the president can’t do anything without Congress’ permission. So, just as much as either Clinton or Bush are to blame congress, particularly the senate (largely democratic,) is also to blame.

Bush has put us in debt, and while debt is good to a degree…he’s already crossed that line. There’s a limit on that theory. So, while some economic issues are his fault (partially,) this particular issue isn’t. Again, I’m not saying that he’s completely guilt free. I am, however, saying that it would’ve happened (more likely than not,) rather or not he was in office.

This has been in the making since the Clinton Administration.

Clinton is to blame because this was his mainly his screw up. Bush is to blame because he failed to catch Clinton’s mistakes. (Largely because he refused to listen to his advisors, and was preoccupied with the war and maintaining his office.)

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Posted 10/2/08
^ The source about us having the biggest debt is in mainstream stream and other sources just google it. USA is the biggest debted nation in all nations. I heard our debt is larger then the world combined.
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