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More from Karno
I _am_ getting better - I actually drew something without a gun to my head. I was thinking about the massive Wall Street bailout while eating my lunch of canned pasta that I'd bought on sale, and this pooped into my brain. Hope me spending time on personal art doesn't piss off anyone who I owe a commission - it's just that this is a topical thing - if I didn't get it drawn now, it wouldn't get done at all.
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That's the problem. One CEO of one bank steals billions, and the bank goes under. And now we've decided to subsidies it! Surely it won't be abused now that the government is pouring money into it to make the problem go away.
The worst part is it's not their money. It's your money and my money.
The worst part is it's not their money. It's your money and my money.
Actually... the last thing China wants right now is their money back. Doing that would raise the worth of their currency because ours would drop even more, increasing the cost to import Chinese goods, which for them right now would be a very BAD thing.
China currently isn't known for making "Good quality" goods, more so "Cheap" goods. Remove the cheap, you'd remove the demand.
China currently isn't known for making "Good quality" goods, more so "Cheap" goods. Remove the cheap, you'd remove the demand.
if you're referring to "letting the free market work" then the right thing to do will cause suffering for people only tangentially related to the mortgage crises and trigger a large-scale "market correction" aimed at nobody in particular
this makes it "not the right thing to do"
this makes it "not the right thing to do"
from a utilitarian point of view the right thing is to reduce suffering from the collapse as much as possible using as little money as possible
there's a good chance we can recover the money by investing companies, sparing a multitrillion dollar depression and restoring the taxpayer funds. it's been done before in similar market corrections and worked brilliantly to stabilize markets and insulate citizens (unrelated to the mortgages; maybe they've seen their 401k evaporate due to the securities, or had their job axed) from the irresponsibility of others
there's a good chance we can recover the money by investing companies, sparing a multitrillion dollar depression and restoring the taxpayer funds. it's been done before in similar market corrections and worked brilliantly to stabilize markets and insulate citizens (unrelated to the mortgages; maybe they've seen their 401k evaporate due to the securities, or had their job axed) from the irresponsibility of others
taxpayers would be punished one hundred times worse if not for government action, i'm not sure how this is missing you
the repercussions of inaction here aren't "we sure taught those corporate criminals a lesson! woo!" it's "oh shit it's a recession that costs five percent of our gdp, unemployment is up four percent, life is much worse for the average citizen than if we had invested a lot of money"
i mean if you want to teach these corporations a lesson you socialize the profits and strip their salary, not leave them to jump ship with whatever severance they feel like taking from the burning dinghy
the repercussions of inaction here aren't "we sure taught those corporate criminals a lesson! woo!" it's "oh shit it's a recession that costs five percent of our gdp, unemployment is up four percent, life is much worse for the average citizen than if we had invested a lot of money"
i mean if you want to teach these corporations a lesson you socialize the profits and strip their salary, not leave them to jump ship with whatever severance they feel like taking from the burning dinghy
It's not the corporations that are the problem, it's the people leading them. What they're doing should be as nothing but criminal. Had there been a threat of such things, this wouldn't be a problem to begin with, as nobody would want to ruin their company and steal millions only to go to jail for most, if not all, of their remaining life, and have their assets taken away to fix what they've done.
still don't understand how your solution renders any justice other than punishment; meanwhile the assets of all the CEOs combined aren't comparable to the economic damage and more people are suffering ostenably so the government doesn't use money that the fed would print regardless
It's OK. The taxpayers won't have to pony up any money for it. We'll just add it to the national debt, totally negating any interest we'd get even assuming the banks will pay that money back in the future.
Makes me feel good that the bank CEOs are being fired, too -- with their multi-million dollar contracts intact. Maybe some of them will be vice president, someday, just like good ol' Cheeny.
Makes me feel good that the bank CEOs are being fired, too -- with their multi-million dollar contracts intact. Maybe some of them will be vice president, someday, just like good ol' Cheeny.
yeah, this is not so good.
the problem with the government tossing money at it is that any mortgages that people owe to the bank will be owed to the government...and when they can't pay, they'll find their homes taken out from under them and auctioned to those that can pay.
Just take that money to distribute about 400k to every american over 18 and let the fatcats go bankrupt.
the problem with the government tossing money at it is that any mortgages that people owe to the bank will be owed to the government...and when they can't pay, they'll find their homes taken out from under them and auctioned to those that can pay.
Just take that money to distribute about 400k to every american over 18 and let the fatcats go bankrupt.
Who could you really offend? Wasn't the plan for this bailout worked out in a meeting between Bush, Obama, AND McCain together?
And yeah, it's a dumb move.. but unfortunately, the reason it had to be made was that this particular bank was so incredibly powerful and far-reaching that, had they gone under, it would have been a global catastrophy. At least that's how I heard it.
And yeah, it's a dumb move.. but unfortunately, the reason it had to be made was that this particular bank was so incredibly powerful and far-reaching that, had they gone under, it would have been a global catastrophy. At least that's how I heard it.
700 billion freaking dollars, just to try and bail our credit and mortgages and crap out of the water.
Which will in turn cause unemployment to go up, which will cause less people to pay off their loans and stuff, bringing us back to square one.
And if the housing market continues to flop still, it's barely even going to make a dent.
Which will in turn cause unemployment to go up, which will cause less people to pay off their loans and stuff, bringing us back to square one.
And if the housing market continues to flop still, it's barely even going to make a dent.
I'm rather conflicted on this one myself. Its true that as the major wallstreet mogals have major fuckups, we imidiately see the problems caused by it. If it continues then it will get worse. However as you point out in your comic, its not exactly very prudent to go ahead and just hand this much money over to buy out private firms who are failing without any end in sight. The idea of american tax payers owning stocks in these firms and then getting returns when and if they get back on their feet that will feed intot he government (and possibly in refund checks or whatnot, or possibly not at all depending on the government tone at the time it ever pays off) or just end up pumping a shit load of money to people who will take it, let their firms implode and run off with the cash.
What had me puzzled was the switch in roles. I mean you had Democrats going for the bill but Republicans wanting to halt it and not hand over the check to wallstreet. Now I'm more of a conservative moderate so I hate anti-republican lables but even I was expecting the Republicans to be for the bailout and Democrats against it, but that was not the case. I guess republicans were against it because of what the news was reporting, that republican office holders have been getting loads of e-mails and letters and phone calls from their voting block telling them to kill the bill. I wonder why Democratic voters are not doing the same to their office holders. Maybe they are but just dont care, or maybe the voters just dont care.
In any case there is no short term solution for this. The economy was high for years and now its correcting it'self and heading back down, it happens, and as much as it sucks there is not much that can be done about it really.
What had me puzzled was the switch in roles. I mean you had Democrats going for the bill but Republicans wanting to halt it and not hand over the check to wallstreet. Now I'm more of a conservative moderate so I hate anti-republican lables but even I was expecting the Republicans to be for the bailout and Democrats against it, but that was not the case. I guess republicans were against it because of what the news was reporting, that republican office holders have been getting loads of e-mails and letters and phone calls from their voting block telling them to kill the bill. I wonder why Democratic voters are not doing the same to their office holders. Maybe they are but just dont care, or maybe the voters just dont care.
In any case there is no short term solution for this. The economy was high for years and now its correcting it'self and heading back down, it happens, and as much as it sucks there is not much that can be done about it really.
http://www.threepanelsoul.com/ and http://www.businesspundit.com/sub-prime/ That's all I can say about this.
One good thing about this crisis: it helped McCain make an even bigger boob out of himself: (non-)suspending his campaign, (non-)dropping out of the debate, (non-)solving the problem by flying to Washington to sit in a room with all the other big shots & say nothing...
Who knows? Maybe Palin's the brains behind his campaign.
Who knows? Maybe Palin's the brains behind his campaign.
Great cartoon, and right on target!
What happens if AIG isn't bailed out? A lot of powerful and influential people lose a lot of money, but not you or me. If your house burns down, your insurance company will still have to pay you the insurance owed, and if it goes bankrupt too, your state insurance fund will pay the bill.
The only party that should be bailed out at the federal level is the FDIC (Federal Deposit Insurance Corporation) which insures bank accounts up to $100,000. The bailout isn't for your benefit or mine - it is for parties such as the communist Chinese government who have bought influence in Washington:
Look at the official numbers: The federalies spent about $1,000,000,000,000 of our money during the past two weeks. Who got bailed out? Not you, not me, nor even those who lied about their income on their mortgage applications and bought houses that they couldn't afford.
Who grabbed our money? The biggest holders of Fanny and Freddy bonds are China, Japan, Dubai, and other random oil sheiks in that order. The Wall Street Journal reported that China put heavy pressure on the federalies. WTF is the outrage?
Do you understand what this means? About 50 million tax returns (mostly joint) pay 96% of all income taxes. What is the bill going to be for us? 50 million into one trillion is $20,000 per tax paying family. If you have even slightly above average income, your "share" of the bill for the last two weeks alone is above $40,000 - for the last two weeks alone!
But wait, there's more! The official figure is based on "only" 200 gigabucks going to bail out Fanny and Freddy. F&F hold 5.5 trillion dollars of mortgages. If the ratio of housing costs to all other living costs returns to its 100 year historical average, housing prices must either drop by a further 50%, all other living costs must inflate by 100%, or some combination of the two. In real inflation corrected terms, F&F's inevitable losses are not the 200 billion already allocated by "our" congresscrooks - they will be in the neighborhood of 2.5 trillion dollars. This makes the amount the federalies will try to collect from us producers equal to about 3.3 trillion dollars, not "merely" 1 trillion dollars. That means that the guns of government are going to have to extract an average of an additional $132,000 from each productive person and family in the near future. Where is the outrage? If I have to pay that, I'll have to lay off everyone working for me; it will be less expensive for me to shut down my businesses and retire. Ditto for millions of other productive people...
Inflation transfers money from creditors to debtors, which is why it is so politically popular. The federalies won't be able to collect those immense additional taxes, so they will inflate even faster by creating more money (not real wealth) out of thin air. It is bad enough right now:
http://www.shadowstats.com/alternate_data
You ain't seen nothin yet!
We are supposed to be living in a constitutional republic, but since FDR, it has been much more like a democracy. Do you understand what a democracy is when constitutional limits are inoperative? It is 51 wolves sitting down with 49 sheep and voting on what to have for dinner. We who work for a living are already being eaten alive, and the above numbers show that it will soon become vastly worse.
Was there a better alternative than these massive bailouts (which are only the start)? Absolutely! If we taxpayers didn't bail out Fanny, Freddy (i.e., China, Japan, Dubai, etc., etc., ad nauseum) and Wall Street, bank failures would quickly cause the FDIC to run out of bank deposit insurance money (they only have 50 gigabucks) - but it would be cheaper to bail out the just FDIC than the endless parade of generous "contributors" to the politicians.
Warning: Very serious inflation ahead...
The regulations actually created the problem! The Democrat controlled US Congress passed the CRA (Community Reinvestment Act) which required banks to make a certain percentage of their loans to low income people, especially minorities - even if they did not have enough income or a good enough credit rating to qualify for a normal mortgage, and even if they didn't have the normally required 20% down payment! The banks didn't object when they were told that Fanny Mae and Freddy Mac would guaranty these sub-prime loans. They are technically called Alt-A loans, but the common name in the industry is "liar loans" because the borrowers were not required to provide any evidence whatsoever - not even one paycheck stub - that they were earning enough money to be able to afford the home and pay off the mortgage. The Democrats decreed that to require proof of income was prima facie racial discrimination.
This scheme continued to work so long as housing prices continued to rise, which they did throughout the 1990s and the early 2000s. The reason housing prices were going up was that the Federal Reserve was increasing the money supply far faster than the supply of goods and services, hence prices go up - inflation. This money supply increase created the internet tech stock boom, bubble, and bust in the late 90s, and then created a housing boom, bubble, and bust in the late 90s to about 2006. The Fed's printing presses are still running like crazy and that is what has created the commodity bubble. If you look at the number of barrels of oil that can be purchased with an ounce of gold, oil prices are up much less in real terms than in current inflated dollars.
Toohey is right about this bailout being a gigantic fraud where losses are socialized and profits are privatized. Fascism can arrive without a single swastika...
What happens if AIG isn't bailed out? A lot of powerful and influential people lose a lot of money, but not you or me. If your house burns down, your insurance company will still have to pay you the insurance owed, and if it goes bankrupt too, your state insurance fund will pay the bill.
The only party that should be bailed out at the federal level is the FDIC (Federal Deposit Insurance Corporation) which insures bank accounts up to $100,000. The bailout isn't for your benefit or mine - it is for parties such as the communist Chinese government who have bought influence in Washington:
Look at the official numbers: The federalies spent about $1,000,000,000,000 of our money during the past two weeks. Who got bailed out? Not you, not me, nor even those who lied about their income on their mortgage applications and bought houses that they couldn't afford.
Who grabbed our money? The biggest holders of Fanny and Freddy bonds are China, Japan, Dubai, and other random oil sheiks in that order. The Wall Street Journal reported that China put heavy pressure on the federalies. WTF is the outrage?
Do you understand what this means? About 50 million tax returns (mostly joint) pay 96% of all income taxes. What is the bill going to be for us? 50 million into one trillion is $20,000 per tax paying family. If you have even slightly above average income, your "share" of the bill for the last two weeks alone is above $40,000 - for the last two weeks alone!
But wait, there's more! The official figure is based on "only" 200 gigabucks going to bail out Fanny and Freddy. F&F hold 5.5 trillion dollars of mortgages. If the ratio of housing costs to all other living costs returns to its 100 year historical average, housing prices must either drop by a further 50%, all other living costs must inflate by 100%, or some combination of the two. In real inflation corrected terms, F&F's inevitable losses are not the 200 billion already allocated by "our" congresscrooks - they will be in the neighborhood of 2.5 trillion dollars. This makes the amount the federalies will try to collect from us producers equal to about 3.3 trillion dollars, not "merely" 1 trillion dollars. That means that the guns of government are going to have to extract an average of an additional $132,000 from each productive person and family in the near future. Where is the outrage? If I have to pay that, I'll have to lay off everyone working for me; it will be less expensive for me to shut down my businesses and retire. Ditto for millions of other productive people...
Inflation transfers money from creditors to debtors, which is why it is so politically popular. The federalies won't be able to collect those immense additional taxes, so they will inflate even faster by creating more money (not real wealth) out of thin air. It is bad enough right now:
http://www.shadowstats.com/alternate_data
You ain't seen nothin yet!
We are supposed to be living in a constitutional republic, but since FDR, it has been much more like a democracy. Do you understand what a democracy is when constitutional limits are inoperative? It is 51 wolves sitting down with 49 sheep and voting on what to have for dinner. We who work for a living are already being eaten alive, and the above numbers show that it will soon become vastly worse.
Was there a better alternative than these massive bailouts (which are only the start)? Absolutely! If we taxpayers didn't bail out Fanny, Freddy (i.e., China, Japan, Dubai, etc., etc., ad nauseum) and Wall Street, bank failures would quickly cause the FDIC to run out of bank deposit insurance money (they only have 50 gigabucks) - but it would be cheaper to bail out the just FDIC than the endless parade of generous "contributors" to the politicians.
Warning: Very serious inflation ahead...
The regulations actually created the problem! The Democrat controlled US Congress passed the CRA (Community Reinvestment Act) which required banks to make a certain percentage of their loans to low income people, especially minorities - even if they did not have enough income or a good enough credit rating to qualify for a normal mortgage, and even if they didn't have the normally required 20% down payment! The banks didn't object when they were told that Fanny Mae and Freddy Mac would guaranty these sub-prime loans. They are technically called Alt-A loans, but the common name in the industry is "liar loans" because the borrowers were not required to provide any evidence whatsoever - not even one paycheck stub - that they were earning enough money to be able to afford the home and pay off the mortgage. The Democrats decreed that to require proof of income was prima facie racial discrimination.
This scheme continued to work so long as housing prices continued to rise, which they did throughout the 1990s and the early 2000s. The reason housing prices were going up was that the Federal Reserve was increasing the money supply far faster than the supply of goods and services, hence prices go up - inflation. This money supply increase created the internet tech stock boom, bubble, and bust in the late 90s, and then created a housing boom, bubble, and bust in the late 90s to about 2006. The Fed's printing presses are still running like crazy and that is what has created the commodity bubble. If you look at the number of barrels of oil that can be purchased with an ounce of gold, oil prices are up much less in real terms than in current inflated dollars.
Toohey is right about this bailout being a gigantic fraud where losses are socialized and profits are privatized. Fascism can arrive without a single swastika...
...and has before
i disagree pretty vehemently on the role of the CRA in the current crises. it's responsible for only a small minority of the subprime loans granted since '99, and you'd be hard-pressed to find an economist who agreed with the assertion that it was the main or even a secondary cause of the bust
otherwise keep doin' your thing
i disagree pretty vehemently on the role of the CRA in the current crises. it's responsible for only a small minority of the subprime loans granted since '99, and you'd be hard-pressed to find an economist who agreed with the assertion that it was the main or even a secondary cause of the bust
otherwise keep doin' your thing
The main cause was the Feds inflation of the money supply which promoted bubbles by providing false signals as to the real cost of capital and by pushing people into risky investments in order to stay ahead of inflation after paying taxes on the inflationary "gains". The Federal Funds Rate is 2.0%. Official CPI inflation is 5.6% over the past year, and the Producer Price Index is up about twice as much. Whenever the interest rate is less than the inflation rate, the real interest is negative - the Fed is paying favored parties to borrow money. They are still trying to inflate their way out of this mess and hope that they won't lose control. That was the biggest problem.
The CRA and the Congressionally "encouraged" willingness of Fanny and Freddy to buy Alt-A (liar loan) mortgages, combined with the implicit (now explicit) government guaranty of their bonds provided a superhighway for bad mortgages - from people of all races and many with mid to high incomes - to enter the system. The changes in mortgage standards were required for compliance with CRA, and lots of people took advantage of it. Fan and Fred then packaged them and marketed them as mortgage backed securities. This toxic waste is now clogging the financial system. The proposed Washington solutions are not necessary to keep main street running. Bailing out the FDIC and the Fed continuing to provide loans to sound banks is necessary, and a hell of a lot less expensive (and less rewarding of bad behavior) than what the politicians and bureaucrats and the bankers and the auto industry/unions, etc., etc., want. The predators are lose and voring!
The CRA and the Congressionally "encouraged" willingness of Fanny and Freddy to buy Alt-A (liar loan) mortgages, combined with the implicit (now explicit) government guaranty of their bonds provided a superhighway for bad mortgages - from people of all races and many with mid to high incomes - to enter the system. The changes in mortgage standards were required for compliance with CRA, and lots of people took advantage of it. Fan and Fred then packaged them and marketed them as mortgage backed securities. This toxic waste is now clogging the financial system. The proposed Washington solutions are not necessary to keep main street running. Bailing out the FDIC and the Fed continuing to provide loans to sound banks is necessary, and a hell of a lot less expensive (and less rewarding of bad behavior) than what the politicians and bureaucrats and the bankers and the auto industry/unions, etc., etc., want. The predators are lose and voring!
The reasoning for the bailout (as far as my understanding) is that if the banks fail, then the surviving banks will no longer lend out money, thus businesses cannot borrow money to grow, nor can people borrow money to buy homes, etc. This all because the banks that do survive will not be willing to risk loans as much as before.
However, this doesn't take two issues into consideration. If we do bailout the banks, will the same banks continue to make so many loans? If "no", then the bailout doesn't keep the economy going strong, and if "yes" then the banks get away with what they've been doing all along and cause the issue again for the future. The other issue is, is it such a bad thing for the economy to slow down and not rely on loans to generate and measure wealth?
I mean really, why not make it so for a business to grow they need to save money to expand instead of borrow money to expand?
However, this doesn't take two issues into consideration. If we do bailout the banks, will the same banks continue to make so many loans? If "no", then the bailout doesn't keep the economy going strong, and if "yes" then the banks get away with what they've been doing all along and cause the issue again for the future. The other issue is, is it such a bad thing for the economy to slow down and not rely on loans to generate and measure wealth?
I mean really, why not make it so for a business to grow they need to save money to expand instead of borrow money to expand?
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