The (latest) bailout: Can America afford it?

Boston Globe


The Bush administration is seeking sweeping powers for what could become the biggest private sector bailout in the nation’s history, as economic policy makers try to end the gravest threats to the financial system since the Great Depression. In a proposal sent to Congress yesterday, Treasury Secretary Henry M. Paulson Jr. sought authority to spend up to $700 billion to buy troubled mortgage-related assets to restore confidence in stock and credit markets, which have lurched from crisis to crisis. Some analysts estimate the cost could top $1 trillion. In the long run, analysts said, the bailout should cost taxpayers far less than the initial outlay as the federal government resells assets once panicked financial markets return to normal. The upfront costs of the savings and loan crisis of the 1980s, for example, totaled more than $500 billion, but the price eventually fell to about $125 billion after bank assets, primarily real estate, were sold...

The mortgage buck stops where?

Christian Science Monitor
by staff


Like a subprime mortgage, Congress may soon put taxpayers on a risky hook for mortgages gone bad. The Bush administration wants authority to spend up to $700 billion, or about the cost of the Iraq war, to buy up troubled loans. A federal rescue effort may stem a financial market meltdown. But it shouldn’t be done without a reckoning. Americans need to hear a full-throated debate by lawmakers about the range of players in this mortgage maelstrom who either lied, took on too much debt, or failed to check creditworthiness as these loans were issued and then sold up the financial food chain to the point where it has become nearly impossible to determine their value. They also need to hear about the government’s role in encouraging a housing bubble — and that will mean Congress needs to look at itself. No longer should federal support for owning a home be based on the false premise that housing prices will always go up or that taxpayers are the final backstop for mortgage holders...

Government bailouts something only a socialist could love

by Phil Valentine


First, it was Fannie Mae and Freddie Mac. Now, the government is bailing out AIG, American International Group. They’re known most as an insurance company, but it wasn’t the insurance end of the business that caused them problems. It was their investment in — you guessed it — subprime mortgages. So, now we’re bailing them out for bad business decisions. Let’s follow this back to the beginning. The government started putting pressure on lenders to grant mortgages to people who, ordinarily, would be turned down. Mortgage companies did just that. Some of these people decided to take on a loan they really couldn’t afford because it was going to get them more house than they needed. Stupid mistake No. 1. The mortgage companies figured at the very least they could repossess the house if the people didn’t pay so they made the loan. Stupid mistake No. 2...

A bailout to nowhere

by Richard Rhames


Sadly and unsurprisingly the story is an old an familiar one: Government socializing costs and risk while securing the outlandish private profits of society’s greediest people. There’s nothing new here.
The more interesting question is whether we are at a point in our rather lamentable and bloody history when the usual tricks may no longer work. In a country that no longer manufactures much except weapons of war, or cultural weapons of mass distraction, kept afloat mainly by massive infusions of foreign capital, with a domestic / domesticated population famously dependent on “credit” and buried in personal debt, are we approaching the End of Something?

The Bailout Plan What does it mean?

Safe Haven
by Clive Maund


Many investors in the Precious Metals sector are worried that the “bailout plan” announced yesterday will resolve the crisis with the effect that things will return to normal and gold and silver will as a result go into retreat once more. Nothing could be further than the truth….. as far as arresting the financial crisis is concerned, it simply can’t work and won`t work - the proposed $1.2 trillion slush fund intended to fund this giant garbage dump is still peanuts compared to the towering $47 trillion debt market and the even larger derivatives time bomb. Not only will the bailout plan not work, but it is set to spread the contagion to a crucial area that has so far been sacrosanct - the US T-bond market...

Bail out or power grab?

Nolan Chart
by Darren Wolfe


The legislation being hammered out in our imperial capital to bail out financial institutions contains a decidedly dictatorial twist. Section 8 relates to review of the Secretary of the Treasury’s decisions. It reads as follows: ‘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’...

Informant: Thomas L. Knapp


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