Antillian wrote on 10/02/08 at 12:03:05:


The problem of these justifications, however, is that they blame the American people in general, whereas only some people actually took mortgage loans during the past few years, and still fewer are in default.  The criticism remains that the bailout transfers costs caused by only a few to the public at large.

It certainly is not true that an imprudent style of life of Americans in general had anything to do with the credit crisis.  The vast majority of Americans live within their means.

I think that a much better solution to the national credit crisis would have been for the public to purchase equity shares in those institutions needing more capitalization.  This would appropriately have penalized present share holders, by diluting the value of their shares.  And the public would have obtained assets in approximately equal value to its expenditure.

I think it's rather stunning that neither Bernanke nor Paulsen, about whom it is endlessly said that they are smart, never came up with this idea, particularly since it has been adopted from time to time in other countries.  If one grants that these men are smart, is appears that each considered an outright handout to Wall Street fat cats more desirable than an equity purchase arrangement.

Fundamentally I think that a gun was held to the head of Congress.  There was a need to act quickly, and only the original proposal was on the table.  Congress is not an institution that could have drafted an alternative proposal in two months, let alone two weeks.

Personally if I were the next President I would ask for Bernanke's resignation.  But that is only a figure of speech. Actually if I personally ever became president, it would presuppose the desire of the American people to rewrite the constitution, abolish the states, and institute a socialist republic.

Dink Heckler wrote on 10/02/08 at 14:26:52:

IT is not as easy to get a mortgage as it is elsewhere...

I listened to Bill Clinton speaking yesterday. I must say that Bill Clinton laid out the link to the cause of the common man  and made a far more effective case for the Bailout....ahem.....err.....I mean Financial Rescue Act.....than the treasury secretary, the President, or any of the two Presidential  candidates.

Dink Heckler wrote on 10/01/08 at 15:05:33:


No. But it made my emigration to Suriname possible in 2000! I had expected - and I was not the only one - a decrease of the house prices after I left. I am a bit clueless why it hasn't happened. At the other hand I do know why they rose in the 90's. In that decade many citizens, due to high conjuncture, had a lot of money to spend. The Dutch like to save money; with their pensions and insurances secured bying a house looked like a good long term investment.
Anyhow, those Dutchies who have bought a house the last 15 years generally are fully capable of paying their mortgages, so there are no forced sells to spoil the market. But this, if I understand a little of economics, is not explanation enough.

trw wrote on 09/30/08 at 21:06:36:


Here I agree and I can't help noticing it's the neocon administration that's responsible for this part. I had expected that this deficit would lead to a gradual decline of the American economy, but here I was obviously wrong.

trw wrote on 09/30/08 at 21:06:36:


I have read this too when The Netherlands suffered from a crisis about 4, 5 years ago. It is simply not true. I can witness that between 1975 andl 1990, when I was still a teenager/student, the crisis was much worse than now. And even that one was by far not as serious as The Great Depression.
Fortunately unfounded panic usually peters out when it's unfounded indeed. How many Black Mondays/............./Fridays have there been in the last three decades?

I don't think 'we the people' come out smelling of roses either. The flipside of the financiers' asset binge was the people's liability binge. A chunk of this went into speculation, and another big chunk into consumption (consumption / GDP has been trending upwards these last few years after being remarkably stable for a long time). We the people run a chronic fiscal deficit and current account deficit, but so far have never had to pay the bill. Well, here's the bill. No problem, we'll just dig into our savings...D'oh!! 

I don't have any particular dog in this fight; to me it's all grist to the mill, part of life's rich pageant. I'm not American, am heavily in cash, have no debt. But I do think that before Main Street grabs for the pitchforks and flaming torches, people need to take a long hard look in the mirror.

Dink Heckler makes an important point.  Credit is drying up.  But I think the main reason this is happening is that everyone is waiting to see what Congress does.

I believe that if Congress did nothing, which would probably be the wisest course, this would eventuate in a fairly rapid restructuring of the U.S. financial industry.  That would be painful, but at least the pain would be concentrated among those who caused the problem.  In any case, credit would flow again, though at an increased cost.  When business people talk about shortages, they don't mean that something can't be obtained, but only that they can't get it at a price they would like to pay.

It's important to recognize that investment banks aren't sources of wealth, only intermediaries between wealth and definite investment opportunities.  So far as I am aware, there is no shortage of either in the United States.