News & Politics - $700 Billion Failout coincides with Dow's largest tumble in history!

Uh Blah · 09-29-2008, 02:18 PM

I think this deserves a separate thread from the Presidential Discusion...

CNNMoney.com Market Report - Sep. 29, 2008

Indicator ends nearly 778 points lower after the House rejects the $700 billion bank bailout plan. As you can see today we surpassed the previous mark held on 9/17/01 which was the 1st day of trading after the 9/11 attacks. While it's not in the top 10 percentage net loss it's important to note that the 2 most recent net % losses were in 1987!

UnsilentMajorty · 09-29-2008, 03:38 PM

The main underlying reason the bill did not pass is... Fear. Fear on BOTH sides because representatives have been inundated with e-mails and phone calls from their constituents urging them NOT to pass the bill.

The reason constituents are opposed to the bill is because they aren't in full possession, or clear understanding of the facts and are reacting in a knee-jerk fashion, "Why should we bail out those fat cats on Wall Street?" What they fail to understand is if we don't act this will eventually effect them if our major financial institutions fail. We will go into a Great Depression. However, they can't make the intellectual leap right now and is why they are telling their representatives not to vote for it. And the senators are all to happy to appease them because this is an election year.

On a related note, this is a prime example of what an ineffectual president George W. Bush is. If he was doing his job properly, he would be on TV and explaining to the general public why we need to approve this bail out and why if we don't act things could get much worse than they are. In my opinion, he should have used diagrams and charts and spoken to the general populace like they are school children and not only explain the crisis (on both the borrower and lender side), but promote the idea tCongress and the House need to act in the best interest of the country. Of course, this would never happen because by doing something like this it is a full admission of his administration's failed policies, but in theory this is how a president should handle something of this magnitude...

ceilirose · 09-29-2008, 03:50 PM

My congressman voted against it after saying he would vote for it this morning. I don't think this bill is perfect and I'm not going to say I understand all the underlying reasons either. However credit for people who are good credit risks is drying up. My measly retirement fund probably took another hit today and I'm almost afraid to look at it.

The media also played it wrong in constantly saying it was a bail out while technically the majority of the money would shore up the banks that were still solvent.

Now we have partisan politics -the Republicans want the capital gains tax ended, blah, blah, blah. It's a pretty sad state of affairs.

**vc318** · 09-30-2008, 06:42 AM

Quote:

Originally Posted by UnsilentMajorty (View Post)

The reason constituents are opposed to the bill is because they aren't in full possession, or clear understanding of the facts and are reacting in a knee-jerk fashion, "Why should we bail out those fat cats on Wall Street?"

Hmm, then I'm surprised that 66 percent of the Republicans voted against this and that 60 percent of the Democrats voted in favor of this. That's a little backwards, in my opinion. Is there a copy of the proposal anywhere online? In addition, you're right about the need for Bush to address the financial crisis more seriously. I don't even know what that mock-up speech was about the other night.

Uh Blah · 09-30-2008, 07:08 AM

Here's the short version:
Calculated Risk: Bailout Proposal

cls21c · 09-30-2008, 07:12 AM

A friend of mine who I worked with when I was in banking sent this to me. I used to balance Freddie MAc loans and and couldn't believe this happened because Freddie and Fannie were so strict about what loans they bought...now I know.

Fannie Mae Eases Credit To Aid Mortgage Lending - New York Times

**vc318** · 09-30-2008, 01:45 PM

Quote:

Originally Posted by Uh Blah (View Post)

Here's the short version:
Calculated Risk: Bailout Proposal

Oh, thanks for that. I was listening to this radio station and they mentioned something like the lobbyists that pay the representatives (both Democratic and Republican) are against this plan because there's no mention of them getting back some capital tax credit. And while I read the proposal, how does this help save the PEOPLE who are losing their home? Yeah, it supposedly helps the banks get some extra money to loan out to people but who needs it these days? Everything is too expensive and the credit of most individuals are destroyed anyway. So, this plan speaks to no other than the wealthy and sends the message that the big businesses that screwed so many can have their problems swept under a rug.

***Raonaild*** · 09-30-2008, 02:49 PM

Quote:

Originally Posted by vc318 (View Post)

Hmm, then I'm surprised that 66 percent of the Republicans voted against this and that 60 percent of the Democrats voted in favor of this. That's a little backwards, in my opinion.

I think there are two main reasons Republicans voted against this:

1) Political reasons - they're too blindly partisan to agree with the Dems on anything, or they think it would be politically dangerous to do so given how their constituents feel about the bill.
2) Philosophical reasons - they think something does need to be done, but they differ in what that something is. Things I've heard suggested are more tax reductions, even less regulation, and some sort of private insurance scheme, all of which sound pretty absurd to me.

I don't think any Democrats were happy about the bill either, which is why a substantial number didn't vote for it. But I think most agree that something needed to be done and for that to happen, they were going to have to comprimise - improve the bill originally presented by Paulson (which was completely absurd, a three page note demanding Congress write a $700 billion dollar blank cheque and expressly forbid any oversight) but not change it so much that Republicans could not accept it. They didn't have a lot of time to work on it either - between the threat of an imminent economic meltdown and an election just weeks away, the clock was really ticking - and the most surprising thing IMO is that the Dems didn't just cave under pressure on the original bill, but have at least made an effort to improve it, even if it didn't meet all the criteria that that Obama listed last week (like more regulation and help for people losing their homes).

***4N6 DNA*** · 09-30-2008, 03:28 PM

Does anyone know anywhere I can get a rundown/summery of the entire situation from beginning to present? Possibly in the way a science nerd such as myself can get a full understanding?

To be honest, I am not very knowledgeable in stocks and the issues of the economy but I would like to be so that I can understand the situation better. Thanks!

cls21c · 10-01-2008, 07:05 AM

Last night ABC reported that members of congress were receiving so many emails from their constituents they were afraid they were going to crash their website. People are furious over this and I don't think many of them understand it entirely. They also said that members of congress who are up for election this year make up a large number of the ones who voted against it. But I guess they started going back through the plan again and will have a new one sometime this week.

**vc318** · 10-01-2008, 08:29 PM

Senate passes financial bailout bill full of sweeteners - Oct. 1, 2008

I knew it would happen. Yes, plan goes for helping in the long run but what is it going to do to help things now? Isn't that why the plan was put out on the table in the first place? Why pass something if it's not going to rectify the problems right now?

metal heart · 10-02-2008, 03:27 AM

i seriously hope the 100 billion dollars set aside for the president is the NEXT president and not bush! one more cent to iraq would be devastating, UGH

**vc318** · 10-02-2008, 07:43 PM

^ Yeah it would be but it's still going to bail out the other corrupt businesses out there. Why should they get a slide while we have to suffer for the mess they caused?

**sunnykerr** · 10-06-2008, 07:34 PM

Because, if we don't bail them out now, then honest citizens can't borrow money either. Not for home repairs, not for honest business purposes, not for car payments. The economy collapses.

I didn't get it before. I still resent it now. But I saw this really interesting show on TV last night where an economics columnist sorta dumbed down the whole thing well enough for me to understand it.

Everyone's petrified right now. Hence the Dow Jones tumble. No bailout, and everyone just keeps freefalling. You bailout and, maybe, things level off a little long enough for someone who knows what the hell it is they're doing to come into power and to implement an economic policy that actually sustains itself.

**vc318** · 10-06-2008, 08:14 PM

Quote:

Originally Posted by sunnykerr (View Post)

Because, if we don't bail them out now, then honest citizens can't borrow money either. Not for home repairs, not for honest business purposes, not for car payments. The economy collapses.

But maybe there shouldn't be so much availability of credit out there. I NEVER understood why banks allow people to have such huge loans or massive credit card limits when they know people can't pay it. That's just plain greedy. And if it was so bad, all they have to do is reverse the interest rate on ALL those shady loans they gave to people out there. But they don't want to. So, I say the banks should deal with it. They have solutions but those solutions don't fatten their wallets.