I was referring to Congress.

Did you see the “bailout plan” passed last night by the Senate?

It included over $100B additional dollars for such things as disaster relief, aid to schools in the west, tax breaks for children’s wooden arrows, Exxon Valdez relief, extension of tax relief for wool research, domestic production in Puerto Rico, and auto racing tracks and lots of other “sweeteners”.

This is a dangerously bad piece of legislation. It’s like the Iraq war with $100B of Bridges to Nowhere thrown in.

Peter, come now. Do you really think the masses are that gullible, to be led astray like sheep, by some elites in the administration? I forget, is it the conservatives, or the liberals who think that way?

Now, no one would like to see the AMT adjusted more than me – I got clobbered by it in my last tax return. But any adjustment in it needs to make up for lost revenue. It’s just incredible that our elected officials can be this fiscally irresponsible and the voters don’t seem to care.

NPR ran a story this morning that 200 economists have signed a petition opposing the plan . . .

http://www.npr.org/templates/story/story.php?storyId=9522493

But the Administration’s propaganda convinces the gullible – NPR also ran a report by David Wessel in which he said that the bailout plan may be flawed “but the alternative – doing nothing” is worse. Notice that phrase – without even questioning it, Wessel – a pundit for NPR and the Wall Street Journal – is propagating the lie that the alternative to this plan is “doing nothing”.

This strikes me as the same mindless religious faith that makes Sarah Palin think Jesus will bless our war effort in Iraq.

No one has shown any concrete evidence that this will actually be the case. I think we would need to see a specific quid pro quo agreement in writing from the banking industry and bond-underwriting industry , i.e., if the US does the $700B deal, they will guarantee their part WRT the credit markets.

We don’t even have a car loan. We do have a small mortgage but it’s a tiny slice of the value of our house (we expect to pay off our house by the end of next year). In 23 years of marriage we’ve had no consumer debt – no car loans, no credit-card loans, etc. We’re aggressive savers so we can pay cash for cars, vacations, furniture, etc. For over a decade we’ve paid the maximum the law allows into our 401(k)’s.

So, needless to say, we’re pissed that not only our fellow Americans, but also investment “professionals” working for banks and investment companies have conducted themselves so recklessly and irresponsibly.

Free market zealots say that people and companies should be free to take whatever risks they want – it’s their money and their neck. But what this episode illustrates is that when individuals and companies take excessive risks EVERYONE suffers if they fail. So I won’t support any “bailout” that does not include strict enforcement of new rules that enforce very conservative fiduciary responsibility by banks and investment houses, and strict limits on consumer and mortgage debt by individuals.

http://www.time.com/time/business/article/0,8599,1723152,00.html

Then if you want to know one possible way to fix this mess go to http://webofdebt.com

I say don’t give one penny more of taxpayer money to these gamblers.

In 2005, Absolute Return magazine found there were 196 hedge funds with $1 billion or more in assets, with a combined $743 billion under management – the vast majority of the industry’s estimated $1 trillion in assets.[3] However, according to hedge fund advisory group Hennessee, total hedge fund industry assets increased by $215 billion in 2006 to $1.442 trillion, up 17.5% on a year earlier, an estimate for 2005 seemingly at odds with Absolute Return.[4]

As large institutional investors have entered the hedge fund industry the total asset levels continue to rise. The 2008 Hedge Fund Asset Flows & Trends Report[5] published by HedgeFund.net and Institutional Investor News estimates total industry assets reached $2.68 trillion in Q3 2007. According to the BarclayHedge Monthly Asset Flow Report, hedge funds received only $15 billion in October, the second-lowest inflow in 2007. Year-to-date hedge funds attracted $278.5 billion, three times year-to-date inflow into equity mutual funds.

BRAKING THE BANKS

As the Gods on Mount Olympus looked down upon the mere mortals and took care of their own brood, the national bankers of the various industrialized nations are throwing dollars in the market to save their kin from the financial Armageddon. It has only delayed the day of reckoning. (This para added on the 13th of August 2007)

SHOULD THE FED BE TRIED FOR TREASON, FOR UN AMERICAN PRACTICES, FOR SELLING OUT THE NATION, FOR LEAVING AMERICA BROKE??? FOR DESTROYING THE ECONOMY AND THE FUTURE OF OUR NATION, AND CAUSING THE PEOPLE OF THE WORLD TO BE ENSLAVED!!

It was over eighteen months ago when I asked Senator Shelby as to when the federal government spends the borrowed money (budget deficits), where does all that money end up at? Well there are many ways you can word this question, many ways to define the deficits, and there are many stories the government tells us about the deficit spending, but the end results are always the same and it seems that the money also ends up in the same pockets, sooner or later.

Our government is more broke than any other government on the face of the earth, in as much as the number of dollars owed and promised to be paid back at some time in the future. There is no money in the social security fund to pay back the working poor and persons from so called lower middle class, who slaved for years for meager wages for a promise that they will be taken care of in their old age. That money has already been spent many times over, our federal government is on the hook for the under funded retirement funds, the FHA loans, the VA loans, the Medicare and the monies owed to the foreign governments and the banks, for the merchandise bought and sold in retail stores, what we call the trade deficit or current accounts deficit.

As our MBA president brags about our booming economy, if he were to be honest he would be crying real tears for how broke we are, and that the house of cards that the Republicans (with help of sell out Democrats) have built could come down any time at the whim of a foreign or domestic banker or currency trader or the Chinese or Japanese Government.

Our country needs to address the issue of fatcats, but I also don’t want the goverment to get too involved with individual compensation decisions.

We should look at the role that BOARDS OF DIRECTORS played in this mess. Boards abdicated their responsibilities of internal monitoring. They ignored their legal duties to shareholders. Company leaders sit in multiple boards, and instead of monitoring, they go along to get along and vote for increases in each others salaries. While we can’t touch salaries that were “fairly” awarded, we can look at the failure of boards to live up to their duties.

This problem is rooted in history and culture. Our cultural values now are that you need to own as much as you can in order to be somebody. You aren’t anyone unless you are better than the Jones’s.

Historically this issue goes all the way back to the end of World War II. America was the only country with it’s industry standing after this war. There was an incredable demand both within the country and the world and we were the only ones that could supply it. This made us rich and we could buy our goods with real money that we saved.

Then other countries caught up, international competition rose, demand dropped and out manufacturing jobs left! But we wanted to still keep getting more and more wealth. Our culture became addicted to wealth. So we kept on buying but this time it changed. Now we started to use credit to feed out addiction to wealth. We started to live in a lie via credit cards, home loans, car loans etc.

In addition we wanted to get rich faster so we invested by vehicles like the 401K. All our money moved into the market out of our savings increasing our risks and you can actually see the market excellerate around 1982 when this vehicle got introduce. All this wealth is consolidated into a relatively few people and excellerated even further via the internet, dot coms and then the housing bubbles.

Meanwhile our debt kept on growing, manufacturing jobs kept on leaving, regulatory oversight kept on eroding, Banks kept on laundering the bad loans, and individuals kept on buying houses they couldn’t afford.

The only way we fix this is we start producing good jobs again that pay well, save more of our money and invest a little less and change our values somewhat and stop making wealth as the end all be all to self worth. Things like knowledge, science, community, helping our fellow man and women and if you are religious even that need to have a larger value when sizing up an individuals self worth.

We are as a society way out of balance!

I agree that wall street needs eat it’s own mess and take on the chin. However if 30% of the people in the country become unemployed and 50% or more of the retiring boomer’s lose there 401Ks and IRA’s what then?

I had a robust discussion with my MBA class last night about the wall street bailout. My sense is that US taxpayers will only be won over if:

1. We assume equity in addition to the bad debt in these banks, the Citigroup deal for Wachovia is a good benchmark, with the Fed owning Preferred stock in Citigroup.

2. The bonuses paid to investment bankers over the past few years should be donated to the fed as part of this bailout, beginning with Mr. Paulson’s bonus as CEO of Goldman Sachs in 2006 of $18.7M.

Vinit

About 10 years ago, almost to the date, the titanic hedge fund Long Term Capital Management failed. This fund was started in 1994 by the former Salamon Brothers bond arbitrage unit, which included several Harvard and MIT economists who believed they had computer modeled the bond markets without error. This weekend, I read the book WHEN GENIOUS FAILED, which tells the story. The thing that is frighteningly similar is that Long Term was doomed by its LEVERAGE. To make tons of money, it had leveraged its capital 30 to 1. When the Russian currency and bond markets collapsed in the summer of 1998, there was a Global liquidity crisis that prevented Long Term from getting out of its positions or trading at all. The fund lost over 100 billion in five weeks, most of it borrowed.

The book begins with the New York fed chairman meeting with the heads of the great investment banks – Bear Stearns, Lehman Brothers, Merrill Lynch, J.P. Morgan, Salomon Smith Barney among them., begging them to extend more credit to Long Term so that it would not fail. None would agree to extend more credit.

HERE WE ARE, 10 YEARS LATER. BEAR STEARNS, LEHMAN, MERRILL LYNCH ARE ALL GONE. WHY? BECAUSE THEY LEVERAGED THEIR ASSETS ALMOST 30 TO ONE TO BET ON SPECULATIVE INTEREST RATE INSTRUMENTS, AND WHEN THE DO-DO HIT THE FAN, THEIR LIQUIDITY DISAPPEARED. HOW COULD THEY HAVE NOT LEARNED THE LESSON OF LONG TERM CAPITAL MANAGEMENT, AND FALLEN VICTiM TO AN IDENTICAL CRISIS?????

The proposition that these financial managers are somehow more intelligent or sophisticated than us is a MYTH. I can’t even balance my checkbook, but I figured it out after reading 2/3 of a book in one weekend. How can we trust the markets when the powerful people who run them refuse to learn the lessons of history. What do we do? Regulation seems the only answer.