Not only do real estate listings appear to be a large share of total ad revenues for the Washington Post, but at least one of their own radio ad campaigns appeared to push the line that the Post was all about selling houses!

A few decades back, the Post earned a reputation as a great paper because it was willing to make it on to Nixon's "enemies list." These days, the Post won't even risk an angry phone call from a real estate lobbyist.

Did you mean $10 trillion?

Dean - You're making a difference. Unfortunately, probably not soon enough.

Please check out what a Kossack, Cassiodorus, thinks of you - and what s/he thinks is next.

Here's a link to the Kos diary:

http://www.dailykos.com/story/2008/9/30/162133/259/495/615825

The folks who think we desperately need a bailout to save "the economy" need to reflect upon, well, first they need to reflect upon the suggestion posed by Dean Baker:

The basic argument for the bailout is that the banks are filled with so much bad debt that the banks can't trust each other to repay loans. This creates a situation in which the system of payments breaks down. That would mean that we cannot use our ATMs or credit cards or cash checks.

That is a very frightening scenario, but this is not where things end. The Federal Reserve Board would surely step in and take over the major money center banks so that the system of payments would begin functioning again. The Fed was prepared to take over the major banks back in the 80s when bad debt to developing countries threatened to make them insolvent. It is inconceivable that it has not made similar preparations in the current crisis.

In other words, the worst case scenario is that we have an extremely scary day in which the markets freeze for a few hours. Then the Fed steps in and takes over the major banks. The system of payments continues to operate exactly as before, but the bank executives are out of their jobs and the bank shareholders have likely lost most of their money. In other words, the banks have a gun pointed to their heads and are threatening to pull the trigger unless we hand them $700 billion.

If we are not worried about this worst case scenario (to be clear, I wouldn't want to see it), then why should we do the bailout?

--- end of Baker quote ---

To my knowledge none of the bailout defenders on DKos has actually responded to such an argument with any degree of seriousness.

And if anyone here is still in search of alternative measures, do check out the recent Patriot Daily News Clearinghouse diary (http://www.dailykos.com/story/2008/9/29/231855/015/160/615119), and read the attached diaries it lists. There's plenty there.

But, well, never mind. Odds favor an attempt to prop up a fictional economy which is so bloated at present that it will see its future in endless and repeated extortion of the American public. It's easy to predict that the $700b is just a planned down payment. Some of you caught the Meteor Blades diary which discusses the $70 trillion credit default swaps market (in a world economy of a mere $65 trillion). Oh, sure, it all looks good on business portfolios, but how much of that paper (incl. hedge funds, CDOs, and so on) do you think is really backed by anything? Nobody really knows how big the eventual bailout will be -- and so my suspicion is that that is why the administration demanded autocratic power over the money supply for the Secretary of the Treasury.

At any rate, all the signs point to one possibility: more bailouts, more money printed up, eventual panic selling of dollar-denominated assets, inflation. See gjohnsit's most recent diary: gjohnsit is incorrect in presuming the bailout to have already passed, but has quite a bit of other useful information.

So when the bailout passes and the economy collapses (anyway) and, lo and behold, the public discovers itself to be in a state of debt peonage, people will be looking for something other than US dollars to put their time and resources into. So at that point we’ll be looking for alternative money systems. One such money system, already in place in several locations throughout the world, is the "time dollar."

In the Post article, Fortune Managing Editor Andy Serwer is quoted: "..if we had written stories in late 2000 saying this whole thing's going to collapse, people would have said, 'Ha ha, maybe,' and gone about their business." Does this mean that financial reporters should only cover what readers are ready to believe?

During the dotcom boom, a freind of mine was a writer at one of the
major consumer oriented financial magazines.

He sad that everyone in the office know that the market was in an
unsustainable bubble, but they were under strict orders by management
not to say it. Saying so would drive readers away because they did
not want to hear that.

Why doesn't anybody comment on how the excessive tax cuts create excessive liquidity thereby leading to investment bubbles (the dot-com bubble & crash followed the capital gains cuts and the housing bubble followed the Bush tax cuts --- remember, the estate tax cuts keep increasing) !

I predicted the crisis a couple of years ago. I have a mortgage business. A new loan became dominant in about 2003 called an option ARM. It allowed people to pull up to 90% of the equity out of their homes and pay less than they were currently paying on their existing mortgage. These loans were represented to be fixed rate mortgages most of the time by the loan officers who sold them. The CDO or collateralized debt obligation was created to obtain a AAA rating from Moody's on securities which were packages of mortgage notes most of which were option ARM's. They were able to get the AAA rating through economic arguements claiming claiming cdo's could have minimal risk, which had no basis in fact.
The option ARM has four payment options one of which is a fixed payment of a fixed rate mortgage ranging from 1% to 1.75% amortized over 30 years during the first five years of the loan. The payment is based on 30 fixed rate mortgage, but it is an Adjustable Rate Mortgage. The initial interest rate of the mortgage was the same one used to determine the minimal monthly payment option. This rate would last from 30 days up to 12 months before it adjusted to it's indexed rate, the index was one of four different indexes. Your interest rate could be based on the 11th district of the federal reserve bank, also known as the fed rate, which might be 1.0% right now plus a fixed rate of lets say 11.0% which would make the mortgage adjust initially to 12%. Now let's say you had perfect credit and were paying $600/month on $94,000.00. A loan officer sees that his home is worth $100,000.00 from a database. You as a loan officer would call this person and ask them if they would like the $6000.00 they have in housing equity in their bank account while cutting their mortgage payment in half?
The only answer to this question all things being equal is "yes".
Most people do not read contracts. The commission in California on this refinance is would be $6000.00. The payment would be about $325/month for five years.
At the end of five years the loan automatically recasts into a thirty year fixed mortgage which will be paid in full in 25 years. This would put their monthly payment at about $1500.00 per month. The problem is most of the people who own these loans have no idea that they will recast after five years from $325/month to $1500/month.
These loans were sold through 2006 meaning that the recastings will end in 2011.
2011 is when the loans will stop going into default. This seems to be unknown in all the discussions I have heard regarding the meltdown.

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