Um. Okay. No bailout for now.

[xiphias]

So, the House Republicans -- as well as a pretty good number of House Democrats -- have rejected the bailout plan.

I have absolutely no idea if this is a good thing or a bad thing. None whatsoever.

In general, though, if this means that they have to go back and put together a new plan that actually has THOUGHT behind it, one that they can EXPLAIN to people, I suspect that would be a good thing. I was uncomfortable with the "AAAGHHH! PASS THIS BILL NOW SKY FALLING EMERGENCY DANGER WILL ROBINSON GIVE US MONEY THIS SECOND" thing.

I could very well be wrong. Maybe I ought to be buying a shotgun and rifle and stocking up on canned goods -- I have no idea.

. . . I kinda want a .22 bolt action rifle, anyway . . .

Comments

[tylik.livejournal.com]

I really don't get what's so hard to understand about this plan. (Though not including mortgage relief is just dumb, especially this close to an election.) This isn't me trying to be stubborn, I really don't get it.

And I'm not sure "this is unpopular and an election is coming up" really counts as backbone.

[ron_newman]

If it's massively unpopular with constituents, then it shouldn't be done; democracy is important.

[xiphias.livejournal.com]

I don't 100% agree. I feel that an elected official should always do what he or she believes is best for the country, accepting that, if their ideas are different than their constituency, they will not be re-elected.

It's important to take the People's voice into account, but a representative should never follow a course of action that he or she thinks is immoral because it is popular.

[ron_newman]

OK, I'll grant you that, but causing this bill to fail is hardly "immoral". Maybe imprudent; we'll see.

[tylik.livejournal.com]

If we had the time, education would be the obvious solution.

And, well, letting the economy collapse would be educational.

[xiphias.livejournal.com]

I don't even understand, precisely, what the problem is, so I have no idea if the proposed solution matches it.

[tylik.livejournal.com]

I have to go teach a class, and this wouldn't be a short post, so I'll see if I can write more this evening.

L'shana tova!

[voltbang.livejournal.com]

I hear you. The money people are freaking out, something appears to be wrong, but, I still make good money, there's plenty of stuff on the shelf at the store, what's the problem?

[amberdine.livejournal.com]

Because there are billions of dollars of liquidity that need to stay in available circulation for ordinary day-to-day business to operate, from people using credit cards to stores being able to buy inventory.

If the banks and major financial institutions cannot supply that liquid capital, credit is no longer available, and a large, very important section of the world economy ceases to function. It hasn't happened yet, so the stores and your employer are still functioning. However, people who know what is coming are pulling out of the stock market, because so many businesses will be unable to run that those stocks will be valueless. (Keep in mind the people still holding those dwindling-value stocks are mutual funds -- owned mostly by ordinary people and pensions.)

How much do individuals and businesses buy on credit? (Even short-term, net 30 stuff, not even counting mortgages and business loans.) That is how big the worst-scenario impact may be.

[voltbang.livejournal.com]

So we couldn't afford our lifestyle before, and the bill is finally coming due?

[amberdine.livejournal.com]

Well, kind of, yes.

Many people, in a particular sector (housing) bought things they couldn't afford, on credit, with loans from big financial institutions. Those financial institutions are involved in many different aspects of the economy. So many people are forfeiting their debts simultaneously, that it affects the income stream of the big financial institutions, such that they can't function, and that has a huge ripple effect.

What irks me most is that the proverbial bill is not coming due for the people who couldn't afford their lifestyle -- though they are the primary cause of the problem. Mostly they've just had to move into an apartment, or a smaller house, abandoning the house they never put any real money into anyway.

[tylik.livejournal.com]

Yes, but it's misleading to try to make it about the individual mortgages. The entire industry was engaged in very highly leveraged speculative investing. While individual people did buy more than they could afford, there was a lot of predatory lending and lying about the terms of loans. But meanwhile, the mortgages themselves, and what was effectively the insurance on the mortgages was being bought and sold in a ridiculously leveraged fashion, often by entities who were leveraging assets they no longer had (or that were no longer worth what they had previously been assessed by) with very little regulation.

[voltbang.livejournal.com]

I meant "we" in a very broad sense. If it was just mortgages, it wouldn't be a general crisis.

[felis-sidus.livejournal.com]

Um, 10% of my retirement savings gone in the last year? And that's with a fairly conservative investment strategy.

However, I tend to be a "bite the bullet" kind of person. Sooner or later we're going to have to deal with our national credit addiction, and it's not going to be pretty no matter when we do it.

I guess it comes down to whether you prefer boom today or boom tomorrow. Because, sooner or later, boom.[1]

[1] For values of "boom" approximating the Great Depression.

[voltbang.livejournal.com]

Gone? Or gone on paper? I don't retire for 20 years or more. I stuck 75% of my retirement money in low risk stuff a while ago to minize the bust. It'll even out in the recovery. Before the crash, I didn't have the money for 20 years, I still don't have the money for 20 years. If I were retiring soon, I'd be a lot more worried.



Is the scale of "boom" a constant? In my experience, it's not. When boom becomes inevitable, it gets bigger over time. Does putting it off make it go away, or does it just make it happen later and worse?

[felis-sidus.livejournal.com]

Gone as in gone. Can I make enough profit on my remaining investments to end up as well off at retirement as I would have been without the loss? Unlikely at best.

I tend to agree with you re the scale of boom.