Wall Street’s cheering the Paulson Plan - a multi-billion-dollar taxpayer-funded effort to contain the credit market crisis. But a backdraft is underway in the blogosphere. Strategist-blogger Barry Ritholtz lays it out here in The Big Picture:
We now see that the grand experiment of deregulation has ended, and ended badly. The deregulation movement is now an historical footnote, just another interest group, and once in power they turned into socialists.
Comments rolling into Calculated Risk are uniformly negative, with the two presidential candidates coming in for some scorn for supporting the asset relief plan.
A temporary ban on short-selling from the SEC is drawing some arrows as well from Zac Bissonnette in BloggingStocks:
It’s clear why the SEC is now banning it: this isn’t about leveling the playing field or making the market more fair or efficient. This about the SEC using its power to manipulate the market upward.
Some close to the Street were critical of the ramifications too. “Wall Street has discovered a great business where the upside is potentially unlimited, but the downside is ultimately put on the taxpayers’ tab,” Cary Leahey, economist and managing director of Decision Economics told Reuters.
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Bernanke and Paulson have executed a coup d’etat, and a compliant Congress has cravenly accepted it. Which country is more pathetic, Zimbabwe or the United States?
- Posted by William BrazillThis mess is not the fault of Republicans or Democrats. It’s Wall Street’s mess. We don’t need a bailout or any new regulations. We need to let the market take its course. Imprudent people will lose money. Wise people will make money. Pain is part of the system.
- Posted by Daniel GrubbWe in Zimbabwe already have some currency designs for sale when the fed starts the presses. I would suggest the billion note for a slim wallet when you head for the grocery store to purchase a loaf of bread.
- Posted by ZimbabwemanGive me a blank check and i’ll sign it….
- Posted by Money worldI don’t understand most of the detail behind the “rescue” plan, but it smacks of “lets do it and we will figure out the details as we go”. Just like lets invade Iraq first and than we will figure the detail out later…
- Posted by hill-billyWHAT ABOUT GRANTING PERMANENT RESIDENCE STATUS TO ANYONE WHO WILL BUY A FORCLOUSED PROPERTY WORTH $100K OR MORE???
There are plenty of people overseas who will buy homes here and lift the real estate market in a matter of month!
Paulson and Bernanke are the shills of Wall Street. Letting those two run our economy is like letting the fox guard the henhouse.
Enough! These two “financial experts” are scaring the politicians into hasty decisions.
The goal here should not be to save the bad investments of the rich, or to keep us out of a recession. The goal should be to restore fiscal discipline and punish the jerks who caused these problems.
They are pitching this bail-out plan as a plan to take over the toxic mortgage debt, but it is really also going to be a plan to take over the toxic derivatives that these institutions have created. Derivatives are the problem because their value is so intangible, and in a market crisis, they become worth nothing. Which is exactly what many of them should be worth.
Just say NO to this horrible plan. Let the economy slide into a recession, and let’s instead invest that $700 billion in clean energy, infrastructure, etc.
THAT will help turn around our economy, not bailing out these thieves.
- Posted by LawrenceI can’t help but wonder if this wall street bail out will also bankrupt the government so the next Bush administration can either start eliminating social security and medicare or at least make it difficult for another administration to continue those programs.
- Posted by AnonGreed and Fear
“Whenever everyone becomes greedy, become fearful.
- Posted by DuurWhenever everyone becomes fearful, become greedy.”
- Warren Buffet
BAD ASS-sets! Sure have taught me a lesson. I read my Barron’s and held on to my AIG thinking it would make it w/ financing. Lost 14k but the gov got 80% and 11.75% on their loan. We have witnessed the growth of the financial sector to a unprecedented % of GDP. That certainly magnifies the pain as everyone is chasing innovative ways to earn. Innovation has been followed by imitators & now idiots. Both parties share in this.Greenspans overly cheap money fueled the irrational exuberance in housing that was expanded via larger GSE’s under Clinton. UNWINDING is gonna be tough.There is no market. Everyone wants to get it off their books so they can start the whole bubble over again.All the banks should be docked the fees,bonuses and comissions they collected along the way.Also,we do not need any more homes built. Lets try repairing and building our infrastructure.National Parks, energy, Modern rail,education. AND GOVERNMENT DOES ACCOMPLISH THINGS- SEE ALL THOSE CONSERVATIVES WITH THEIR HANDS OUT FOR CORPORATE WELFARE!
- Posted by chipThis republican idea that extols the image of Reaganism and triumphant America is utter BS. Russia is not a shining Democratic success story no more than the US. See torture,mistaken detainment,wiretaps, 100,000 + innocents dead in collateral damage. Love my country but wish we bore our patiotism thoughtfully in our hearts with concern for the world community and a larger updated WORLD view.We are not top dog anymore; the center of power has shifted.Our current courting of money from abroad for our distressed corporations is proof.
In an associated Reuters story, CHRISTOPHER LOW, CHIEF ECONOMIST AT FTN FINANCIAL IN NEW YORK said, “What this program does indirectly is that it will support home prices.” And, “Taxpayers can make money off this program, albeit it would be a long time.”
First, over-priced, non-appreciating homes are what created to the financial crisis, and the financial crisis led to Bushes bailout of the insurance and financial industries. So propping up home values completely out of line with homebuyer incomes is the right thing to do…why? I would argue that this is EXACTLY the wrong thing to do.
Also, if it is A-OKAY for taxpayers to buy up all these bad loans because they should have value sometime in the future…then why don’t the banks just hang onto them? With interest and savings rates at around 2%-4% and wholesale inflation running at closer to 10% the last thing taxpayers need is to have more of our incomes and savings being decimated by inflation. Dumping bad debt that theoretically may prove beneficial to taxpayers isn’t much of a guarantee. Seems to me that that will just guarantee that eroding middle class wealth will stagnate for even longer….
- Posted by RonReganomic,s Trickle down economic model meant money for the rich and benifits would trickle down to the rest of us. They were right Bush just gave everyone a Golden Shower we wont forget.
- Posted by beegeThe Reuters lead-in to this web log goes something like this, “It’s the end of deregulation as we know it…”
Wow, Mr. & Mrs. Reader! That’s pretty darn interesting, as they say out here where republicans are loved even more than beeves on the hoof or the oil flowing somewhere beneath them. Naturally, there is no rational reason for that abiding love, except that the term republican is synonymous with the avoidance of diversity (and that isn’t rational…or maybe it is…to a republican).
Nancy Pelosi (not a republican by the way, although she fits the one dimensional image of one) says that the $700 Billion revolving line of credit that the Bush administration wants so badly for its secretary of the treasury needs just a bit of congressional oversight.
Here’s why: Sec. 8. Review. Decisions by the Secretary pursuant to the authority of this Act are NON-reviewable and committed to agency discretion, and may NOT be reviewed by any court of law or any administrative agency.
That sounds almost like the Military Commissions Act handed to the Bush administration by a republican-controlled congress on a silver platter in October 2006 just before the republicans lost control of congress as a result of the elections of 2006. How timely! Almost 4 years a U.S. senator, Lindsey Graham, loves that unconstitutional law (even though he’s a lawyer)!
Sec. 8 also sounds to me like elimination of legislative branch & judicial branch checks and balances on the executive branch dictated by the U.S. Constitution.
Maybe that’s what Reuters means by “deregulation as we know it.” The latter has traditionally meant the deregulation of Wall Street and the banking industry, e.g., the rollback of the Franklin D. Roosevelt administration’s taxpayer related banking and Wall Street safeguards that came out of the stock market crash of 1929 and the run on the nation’s banks associated with the Great Depression of the 1930’s, e.g., the Glass-Steagall Act of 1933. The latter was severely weakened by Bill Clinton when he signed the 1999 Gramm-Leach-Bliley Act that is associated with the other republican senator named Gramm (Phil).
Mr. Graham and Mr. Gramm are almost two peas in a pod. Both are strong supporters of John McCain. Mr. Gramm is the former chief economic advisor to Mr. McCain who said that the American middle class and working class are a bunch of whiners. Then Mr. McCain fired him and hired Ms. Carly Fiorina. She said in so many words that nobody was qualified to CEO a corporation but her. Then Mr. McCain fired her and hired Mrs. Palin to sub for her.
Who knows, maybe the Bush administration will attempt to use the $700 Billion authority to fund a new front on the so called global war on terror (gwot a.k.a. gee-what?).
After spending nearly as much as $700 Billion in Iraq and Afghanistan without finding Osama bin Laden or Ayman al-Zawahiri, why would a (now) democrat congress think that it can trust the Bush administration with the global war on bad mortgages?
I’m with Mrs. Pelosi on this one.
OK Jack
- Posted by OK JackI agree with TJ. Greedy customers are the real culprits. I wonder how many of them already wrote angry posts on this blog?
- Posted by PhilPaulson and Bernanke are Dumb & Dumber in the new film
* Billionaire’s Bailout Plan *
- Posted by bonaeWomen and Children First, Hank and by that we did not mean fleecing Widows and Orphans by leaving out the FDIC.
- Posted by bonaeLet us not forget the great deregulator Ronnie Reagan the bad movie star and the trickle down of Reaganomics.
- Posted by BarryMccain’s economic adviser Phil Gramm wrote the big deregulation bill of all times and Clinton the fake Democrat signied it.
- Posted by BarryDon’t forget it was the Maverick Mcacain who had a big part in the mortage deregulation! Republican are just IDIOTS who never learn from history!
- Posted by Maldono politician or political party is to blame for this mess.
the basis of the problem is no-questions-asked loans made to people with no questions asked ability to repay.
the Harvard MBA’s found sufficient loop holes to lend somebody else’s money to people they in all certainty knew could not maintain the level of income required to repay the loan and eat, too. how many “zero interest” credit card offers did you get? did you think then or now that “zero interest” could last 30 years?
the schemers found the loopholes, got their “cut” and cleared out of town. no difference to the snake oil salesman huckstering his elixir out of a covered wagon and getting out of Dodge before the customer found out it really did not cure gout.
do take note - _some_ banks and financial institutions had the brains to _not_ buy into this latest episode of the Emperor’s New Clothes. ask why.
one cannot legislate intelligence.
the scammers found a willing batch of greedy customers. frankly, they should all be allowed to collapse in the most spectacular fashion possible. that would instill some intelligence in the banking community - which fails to learn - can you spell: “savings and loan
- Posted by TJFolks, be on the look out for the business pundits and republican aplogists to start saying that the federal government will actual make money off this buy out. The lies will be coming anytime now. Of course they never say why the “private sector” did not keep all the debt if it was ulimately going to be so profitable.
- Posted by Ralph