and there is a crisis, no matter what the multitudes who don't know jack about it say.

I think many in the blogosphere need to take a look at what they do everyday. What is the value in opining authoritatively on things for which you have no actual expertise or special understanding?
Everyone with a blog becomes an instant expert whenever the new crisis pops up, but there's a point when it just creates sound and fury and no light.
Know your limits.

Isn't it the supposed "experts" who got us into this "crisis?" And now we're supposed to trust them to get us out? All we have to do is give them unlimited funds and let them work their magic.

for those of us who are not experts on the economy and find this crisis very hard to understand, this and many other blogs have been very helpful...quoting and linking to other sources that help to put the bailout and other information into terms that regular people can understand.
the blogs help to sort through information,locate other links and the comments are extremely helpful too...from both sides.

it would not be possible for me to find out all of this information on my own. i am grateful for all of the resources i can find....and i find that the opining from bloggers and commenters is helpful...just as one would sit around a kitchen table.
not everyone in the family is an expert, but it is good to hear opinions.
everyone is involved in this crisis.
and everyone can share their opinion here, just as they would at the dinnertable.

how 'bout "there is no crisis that hasn't been building and should've been taken of before the last week that congress was in session before a tight presidential election"? the administration has friedman-unit'ed the iraq war so they don't need to develop an endgame to that mess. they were trying to do the same with the economy. push it until after the election and any recession that follows can be laid squarely at g.w.'s feet. he wants it done now because he doesn't want to be accountable. again.

All I know is that people get sold things on a consumer level.
Last week I got a $4 grand line of credit at Best Buy to shop for a TV.
Yesterday, in the mail, I got credit card offers from Citi and Chase.
If the "straight banking" sectors are "shitting their pants", maybe they should stop offering Americans easy credit for a couple minutes in order to sell their bailout.

You're going to have a tough time convincing me that it is better to let Bush deal with this now then let Obama deal with it in February.

love it: "WE are the experts, only WE know what's really going on."

this person (the emailer) importunes us to put aside our torch-and-pitchfork instincts for the greater good, so that we can see our way clear to BEG these people to take our money?

let me tell you that i would rather eat rice and beans and live in a fucking lean-to shanty the rest of my life than beg these people to take my money.

no thank you, asshole, and damn the consequences.

also, if paulson and bernanke didn't see this coming (or did but said nothing), but roubini predicted what's happening with some precision, wouldn't (in a prefect world) it make sense to ask him what should be done? i know he's a private citizen and not a member of the administration, but... if they were doctors screening you for cancer, which one would you listen to?

I know I'm getting a little "strawman" here.
Know your fallacies, anonymous finance guy. This one's ad hominem.

I think profane and informed reader has created a false dichotomy. The issue isn't crisis/no-crisis. The issue is the nature of the financial crisis. Is it simply a liquidity problem, or is the liquidity problem a symptom of the fact that investment banks have made a series of really bad investments and now cannot price their holdings at fair market prices as no one in the market is willing to buy them at any price.

I am not an economic expert, but I have spent the last seven-and-a-half years closely studying the current administration to know that they are incapable of handling this crisis in any competent way. The question isn't between $700 billion no strings attached or nothing. The question is how do we address this in such a way to shore up the market, avoid moral hazard, and prevent this from happening again. The second crisis will occur when foreclosures start destroying neighborhoods. Maybe we should address this at the same time.

Nice to see another Pittsburgher (need bailed out)!

I agree with you though, it needs fixed :) but the controversy points to a more troubling dynamic. What the current administration is good at is not just creating awful situations, but awful situations that then demand incredibly painful and unpalatable solutions, thus turning the Democratic party against itself by pitting the idealists against the pragmatists. For an example, look at how the comments above, turning on one of their own...

Is Bush acting like this is a crisis where he has to sacrifice? No.

Are the people asking for the money acting like there's a crisis where they have to sacrifice? Are they willing to have regulation be part of the bailout? Are the people asking for the money taking responsibility for the unlawful activity they did to cause the problem? No.

It just doesn't sound like they people who want the money are acting like it's a crisis.

kaybeel wrote, I think many in the blogosphere need to take a look at what they do everyday. What is the value in opining authoritatively on things for which you have no actual expertise or special understanding?

As opposed to all these geniuses and experts in the finance sector who saw the housing bubble for what it was, years ago when it started?

There is a crisis in that the FBI is looking into the companies that got us into this mess. It is a crisis for the executives of those companies. Things are getting hot and they want preemptive immunity and golden parachutes to take to Paraguay, so it seems.

They think they can cook up some new, crazy derivative to sit on top of the failed credit default swaps, restore the Wild West credit market (and by extension, liquidity), and make a shitload of money.

So THAT is where the former employees of Enron went.

I agree with the scientific consensus that fossil-fuel accelerated Global Warming exists.

And that it is a huge and immediate crisis.

However, if the head of the EPA who used to run Exxon stepped forth and said "Give me $1 trillion to address global warming by the end of the week, and no one can tell me how to spend the money and I'm giving you not even a hint of why I think this will work," I'd say no to that, too.

You only get one shot to fix this. There are no do-overs. And if it helps bankers limp along a few more months but then it all drops again, and 'the economy' but the vast majority of Americans get screwed (except for 'stability'), then it's a terminal error.

how bout we ask iraq for $700 billion in future oil revenue if we promise to leave their country shortly? win/win.

Clueless as I must be I fail to see why this can't be fixed by spending a small amount of money to remove uncertainty at the front end. Viz:

1. The federal gov't takes over the mortgage _payments_ of anyone that isn't paying them. (cost ~$2B/month*)
2. The federal gov't extracts ~$2B/month worth of pain from the people that got us into this mess (Revenue: ~$2B/month**)
Er...That's it. No $1T bailout required.
*Given that there are ~1M mortgages likely to go into default over the next year,and that the average monthly payment to keep them current is ~$2000, we can see that all the problem mortgages could be kept current for ~$2B/month.

Note that if the mortgages are guaranteed to be kept current by the gov't, then all the $45T worth of wall street gambling on them becomes moot.

**The details of who this is and how to recoup the money can be argued about ad nauseam. The main thing is, it won't happen in the context of a trumped-up crisis. Everything from taxing financial execs who earn >$1M/year to taking equity in houses in exchange for tenancy, rent and/or community service could be on the table.

I've talked to people from across the spectrum, including staffers from Keith Ellison and Michelle Bachman’s office about it, and I’ve yet to hear anyone argue against or even disagree with it.

Is the core of this problem really any more complicated than this? This isn't my field and I really want to know.

for the person who asks what would roubini do, roubini is for the bailout, and he thinks it's overdue.

@Chris Dickson:

Interesting suggestion - Please add it at http://publicmarkup.org/bill/dodds-legislative-proposal-treasury-department-aut/1/2/ where Sunlight Foundation has posted both the Dodd and Paulson proposals for comment.

Sunlight's proposed Transparency in Govt Act was up for comment from April through July of this year, and their staff has met with numerous Members of Congress on it since. They'll do the same thing with these two bills, and more as they are proposed.

Not surprisingly, the bailout bills have attracted twice as many comments in two days as the Transparency bill got in two or three months.

As Naomi Klein states, this isn't a crisis.

It's the jumping point to launch the real crisis:

"We must dismantle social security since there are (somehow?) no more funds."

"Expand health insurance for all Americans? No, we have to kill Medicare instead - we already have a $10 trillion debt."

"Remember the Obama recession? Then, Democrats increased our deficit and our taxes!"

"Remember when we yous to have a Department of Education?"

Are the people asking for the money acting like there's a crisis where they have to sacrifice? Are they willing to have regulation be part of the bailout?

Are they (those making>$500K/year) willing to pay higher taxes immediately to pay the $700B? Is the Bush admin willing to ask for it? Isn't this the perfect chance to ask about fiscal responsibility? ASK THESE QUESTIONS EVERY CHANCE YOU GET.

As we come down to the wire with the wheels disintegrating under the McCain campaign, what looks more each day like the control of both houses (Veto proof? Only maybe) going to Democrats, and the products of nearly every tenet of Republicanism raining down like Hell's own wrath upon the GOP and those who suffer under the republican kleptocracy, suddenly the elephant wants to shove its trunk into the Treasury for one last, deep, $700Billion snort!?
And its a sudden emergency! That's why the administration has worked on this "plan" for seven months already! Never telling us about this "clear and present danger"!

The architects of this "plan" are the "masters of the universe", the architects of the very money temples whose sweet, unfathomable scheme collapses in fllames as we speak. With all the sophisticated consideration of a "big kid" flipping a ball at your nose and saying "Thinkfast!", the administration offers the one and only solution to be considered, benefiting those the Republicans have always deemed most worthy.

The Consitutional violation involved in this $700Billion bailout adds one more flavor to this rancid stew.

The reality of this administration's venality, and incompetence, and desire to accumulate power at any price to the nation, should exclude it from consideration as the executor of any buyout in this crisis. By January, there will be a new president, and then we shall rise, or burn, according to our choice. Amazingly and sadly, that's better odds than we get from the current Republican administration.

This is why I'm moving towards a chips fall where they may position. Let the market ride it out as they can, some survive, more fail. If we guide the market in taking this hit, it will reinvigorate the world's respect for the U.S. financial markets. If we bail them out, the world will know we're asking for another, sir.

"... the corner of Wall Street which produced this mess is wholly operated by testosterone-fueled assholes with God complexes."

While I'm not an insider, I am a New Yorker. And I have to say that that description has the ring of truth.

But frankly, this hardly seems like the solution:

" Bernanke and Paulson quite rightly fear that a voluntary program that isn't full of gimmes and profits will have no participants and will solve nothing. [...] Paulson and Bernanke really fear that these assholes will continue to take a series of increasingly big, stinky dumps on the global economy if we don't kiss their asses and beg them to let us buy their shit."

That's not solving the problem. That's capitulating.

Perhaps our "informed" reader needs to take a look at the 1992 Swedish Crisis. It looks like forcing some of those companies sell themselves to the government in exchange for being rescued, and without any "gimmes", led to several of the compnies rescuing themselves instead.

.

" Bernanke and Paulson quite rightly fear that a voluntary program that isn't full of gimmes and profits will have no participants and will solve nothing. [...] Paulson and Bernanke really fear that these assholes will continue to take a series of increasingly big, stinky dumps on the global economy if we don't kiss their asses and beg them to let us buy their shit."

and how does handing them $700 billion with no strings keep them from doing the same thing all over again?? I can't see that it would... it would just fund the next ponzi scheme that they would cook up...

If they are in crises, then they would agree to auditing, cutting CEO pay, clearly marking each mortgage derivative, with the address of the home buyer, so we won't pay more than once for the derivitive and they should surcharge those investors progressively as they sell their investments to help pay the government back.

> I think many in the
> blogosphere need to take a
> look at what they do
> everyday. What is the value
> in opining authoritatively
> on things for which you have
> no actual expertise or
> special understanding?
> Everyone with a blog becomes
> an instant expert whenever
> the new crisis pops up, but
> there's a point when it just
> creates sound and fury and
> no light.

As opposed to financial services guys (and they are almost all men) who spent the last 5 years calling themselves "the smartest man in the room", extracting $20 million/year bonuses for themselves, and CREATING the alleged crisis we have now? But suddenly they are so smart they know what they did wrong and how to fix it?

> Know your limits.

Uh, yeah. When an industry calls for $700 billion from the pocket of the small taxpayer to nationalize itself I think it might just have reached its own limits. But hey, one thing they know for sure: clawbacks of salary and bonuses won't help one little bit. No siree. Highly counterproductive in fact.

Cranky

At least consult folks who do know their stuff, like Krugman, Brad DeLong, the crowd at Angry Bear, etc. They will tell you that a) Bernanke is a genius and the best man we could have for what he's got to do, b) Paulson is a tool but he's a smart tool and listens to Bernanke and understands what Bernanke is saying, and c) these asshats on Wall Street have a real chance to send the economy spiraling into a deflationary spiral similar to the period 1930-1932 with disasterous results if we don't get their evil effin' paper off the market. That spiral brought Hitler and Mussolini to power, remember?

So there's plenty of damned good economists out there who have not been part of this mess, especially the academic sorts like Brad Delong, and you need to read them. It has disappointed me greatly that the entire left-wing blogosphere apparently has bought into the notion that if a Bush appointee proposed it, it can't be any good. And half the politicians in D.C. are out there playing politics with the house on fire instead of doing their job. But I've looked at the situation and the solution proposed, and my reluctant conclusion is that a) yeah, it'll work, and b) jeez I wish there was a better way to do this, but I just can't think of a better way. There should be some tweaks to it -- like a committee of Paulson, Bernanke, and three Congressional appointees making the decisions, rather than just Paulson himself -- but the problem is real and the solution as unlikely as it seems actually is the best of a bad bunch of options. Most of the other options, alas, end up with a new Great Depression and bad things. Really bad things. You don't want to know :-(.

> At least consult folks who do
> know their stuff, like
> Krugman, Brad DeLong, the
> crowd at Angry Bear, etc.
> They will tell you that a)
> Bernanke is a genius and the
> best man we could have for
> what he's got to do, b)
> Paulson is a tool but he's a
> smart tool and listens to
> Bernanke and understands
> what Bernanke is saying,

Krugman I will buy. DeLong is well-informed, smart, and worth reading, but despite having worked as an AssSecTres he is painfully naive and totally unaware that he functions as a useful idiot for the plutocratic class. That might be excused, but he is also utterly smitten by the (little g) great man theory of business and finance. That is, the belief that there are roaming the halls of business and finance great men who are far smarter, more intelligent, wiser, and experienced than we mere mortals and whose vision is clear and pure. And who must not only be obeyed instantly but worshiped as well.

Now, in the course of history there certainly are a few Great Men (large G) - but generally they are only known as such in retrospect. Having worked in the real trenches of American business while DeLong was climbing the ivy I can report with confidence that while there some smart men, some geniuses, and a few great men in business 99.999% are just ordinary mortals subject to the same biases, blindnesses, and stupidity as everyone else. Hell, I went to school with some of the smartest men in the room (e.g. Fastow) and I can report they they were just more aggressive and brutal (and perhaps actually stupider) than their classmates, not godlike.

As far as Berneke goes, I believe his is on record as of 12 months ago saying the current crisis would not and probably could not happen. Opps. And as soon as you start talking about anyone in the Bush/Cheney Administration being stupid but surrounded by smart people he listens to I start to think of the real puppet masters: Cheney, Addington, and Norquist.

Cranky