Login Here
Warren Buffett thinks the bailout is necessary. In fact, his advice to Congressional leaders may have been what convinced many holdouts to back it. The stock market certainly thinks it's necessary: I thought I’d heard on the radio that it’d been up at first. What actually did happen is that it dropped 300 points in the first twenty-odd minutes, then held relatively steady within a few dozen points of the 10,800 mark until 1:40 pm (which was around the time it became clear there would be no deal), when it dropped to 10,480. Fifteen minutes later it was back over 10,800 again, but then entered a yo-yo period and wound up at 10,365 --a 777-point loss for the day, the worst point loss ever (though not the worst by percentage of market value; that honor belongs to the Black Monday of 1987). Paul Krugman thought and still thinks that a) a deal is necessary and b) the dead deal is as good a deal as we could have got with Bush in office:
... [The plan] passes my test of no equity, no deal; that, plus the danger of financial panic if it doesn’t go through, makes it worth passing, though celebration is not in order.
[...]
Overall, Dodd and Frank succeeded in pushing Paulson a fairly long way back; probably as good a deal as they could have gotten. But someday we’ll have an administration that actually proposes good policies to start with.
On the other hand, Nouriel Roubini said it would hurt more than help, and Stirling Newberry goes so far as to say it would kill America unless it's stopped:
If we do not turn this back now, we will leave any hope of compromise and conversation, any hope of debate, and will turn instead to darker means which will destabilize the very foundations of our society. Strikes, and even violence, will grow over the coming months, as people are told that the people must pay in full, the debts that the powerful have washed clean.
This is beginning to look like an updated version of Rashomon. Who do we believe?
Spotlight
Support this site!
Keep
up with news
Advertise on Firedoglake
Send
us your tips
Make us your homepage
About Firedoglake
Advanced search
RSS/XML Feed
Hi PW….. I have hours of posts to catch up on…. what a day!
i’ve been gone for a month or more—can someone sum it all up for me?
in a consise manner?
McCain Sucks. Works better than zed for me.
I have a problem with the idea that the DJIA was ever up 300 this morning. See this, which shows the market opened down, and kept on plunging down. I don’t know where your up 300 came from…
concise, sorry. i so hate it when i spell badly.
rofl.
any bets Jr. gets on the boob tube tomorrow am and pouts?
Just about the only thing he’s good at now (other than brush clearing) is poutrage.
Also, every time W gets up to “comfort us,” and “help by ’splaining it all to us,” the market tanks. Is he REALLY trying to cement his spot as The. Worst. President. EVER.?
You’re right.
The Dow was never in positive territory today.
Ah, Rashomon. The warning about extreme subjectivism. It is true that witnesses of the same event can come away with very different impressions of the same event. And we should be reminded of this every time we hear Republicants proclaiming their own views of reality.
But reality does have a way of biting you on the a** to get your attention. The scientific revolution was, in essence, a method for achieving, if not objectivity, then at least enough common ground to get by together.
Rashomon is apropos because right now, in Congress and the Administration, there are many different views of what is actually happening in the economy, let alone what to do about it.
Bob in HI
Thanks! I was wondering if I was hallucinating or something!
Whom do we believe. That is a good and almost unanswerable question. I’m a professional economist. Paul Krugman is a friend of long standing, and I know a lot of people who were and are high up at the Fed. My first published article (1977) wrote out the underlying economics of the kind of crisis we are now going through (sunk like a stone, like most articles). So as compared to most people I am knowledgeable and in principle have the training to understand what is going on and make a decision.
All this to say, that on my own knowledge, I couldn’t make a decision. I couldn’t tell whether this is a sell-out to Bush’s pals on Wall Street, or something that is what stands between us and economic doomsday. I am prepared to take on faith that it is the later, in spite of my total distrust of whatever comes out of the Bush administration (fool me once …).
So whom do we trust? I trust Warren Buffett, and have put my money where my trust is. I trust Paul. I trust Charlie Calomiris, I trust Brad Delong and Barry Eichengreen But I also trust Nouriel Roubini. I just don’t know.
A risk-averter would support the bail-out. I’m a risk-averter. I think we all should risk-averters in this context. I don’t like any more than anyone else, but if you wake up one morning, and you find your gas station doesn’t have any fuel because the company that supplies can’t get working capital to cover the inventory, you will be experience the direct effect of a financial meltdown. When your company or even your university can’t pay you, or worse, their check bounces because they couldn’t keep the line of credit that covers the gap between tuition payments and cash outflows, you are experiencing the consequences of a credit meltdown. If your grocery store can’t stockl food supplies, you are experience the consequences of a credit meltdown.
This is serious stuff, folks. I don’t think we should take the risk.
i had the site of
www.financialservices.house.gov for the bill, but it’s not coming up, anyone have a better link?
i’ve been gone for a month or more—can someone sum it all up for me?
Economy went boom!
Paulson says “gimme $750B, or Wall Street people will starve and die.”
Democrats call bullshit, and add some mushy picky-points to bill.
John McCrazy suspends campaign, flies in and saves the day by saying nothing and having a real nice dinner.
Repubs say “close enough, we’re in”.
Nanacy makes a speech, hurts Repub feelings.
Repubs take their
ballbill and go home.We’re fucked.
The End.
Isn’t that a little harsh?
After all, he did say if the bill didn’t pass “This sucker could go down”.
He certainly got that right.
What a day, indeed.
Warren Buffett bought a huge stake in Goldman Sachs. Goldman Sachs CEO attended meeting with Paulson. Paulson (and Josh Bolten) are former Goldman Sachs employees. Buffett was betting that the bailout would occur and give him a quick tidy profit. Goldman is linked to the Administration of Bushco thru Paulson. AIG was bailed out for $85 billion. Goldman would have lost 20 billion if AIG was not bailed out. Buffett had a simple plan. He followed the money and the power. He bet wrong, so far.
Pelosi still thinks she can sell this monstrosity.
I’m seriously risk-averse because I’m staring retirement in the eye and watching my retirement funds evaporate. However, I’m opposed to giving 700 billion dollars to the people who packaged this shit up and caused the problem. All this program does, that I can see, is throw a life line to a bunch of dudes on Wall Street who caused the problem. Screw them.
Warren Buffett just invested $5 billion in Goldman Sachs. He has a conflict of interest.
In any event, my question to him would be if the taxpayers invest $ in these firms shouldn’t the taxpayers get no less than the terms he got. (Convertible preferred shares paying a 10% dividend).
We need to get the credit system de coupled from the wall street poker players.
My sentiment entirely.
Thank goodness I’m not the only salmon making my way upstream here.
It was DOWN 300 when the vote began. You might want to correct that, PW.
http://www.cnbc.com/
love you.
thanks.but i meant all of the other stuff, too,…….
am coming your way, going to be in the indiana frame of mind the weekend of the 12th do you and fini want to meet for lunch? hors de vores?
is a once a month thing, so, if not october, november would work. and on and on.
dmactree at yahoo
would be a good thing.
Now, THERE’S an idea that should be part of anything that comes out of Congress.
Insiders looking to make out … Isn’t insider trading illegal?
Also, every time W gets up to “comfort us,” and “help by ’splaining it all to us,” the market tanks.
oh, but you seriously misundestimate the genius that is georgie.
Tomorrow’s speech is at 7:45 A.M. Markets don’t open till 9:30 A.M.
See?
“Ah had nothing to do with it.”
I read that and thought I’d been hallucinating this morning! How have you been? Any new jams/jellies for breakfast?
I say shrink Wall Street to fit in bath tub and open the drain!
i feel like the gpa in moonstruck that says
“i’m so confused”
Technically, Buffett made an outside bet. Then, he attempted to influence policy after he placed his bet. That’s why he’s pissed off now. He knew that his blessing would help to sell the bag of flaming bushshit. It didn’t, yet.
welcome to the club.
Awaiting cranberries to make next batch. Finally got my chest freezer & filling it up with vegies, and soups. Next year I’ll have it soon enough to do fruits in season.
That’s what I thought. When I looked at 5 after 10 it was already down 245.
Do you remember the scene from The Rose when Bette Midler just keeps moaning “I’m so tired”. That’s how I feel. It’s been 8yrs of one disaster after another w/ our idiot president. And now, after all he’s done, the country I love is going down the tubes. I don’t know if the bailout is needed but I do know that if we had had a competent administration we wouldn’t be in this position. At TPM, one of Josh’s deep thoughts was “Why has Bush ruined this country?” That’s what I’d like to know.
You & me both.
Bob in HI
ecahn, in my days lately i have wondered what you thought about all of this, and even mentioned you in a conversation with my dad who is not a ‘male friends on the internet’ kind of guy……… my dad was here three weeks ago and wasn’t in a panic, and as you know from the background i have shared, he would have a reason to panic if there was one………so, is there one?
he wasn’t and that tells me a lot……he was more worried about my grapevined in my woods taking over……..spent the weekend killing them, and not much time about the crisis…..makes me wonder.
Greed has no bounds.
How bout we limit income or wealth so when you get there you are out of the game and can only spend.. not earn?
I think I’d avoid walking on Wall Street tomorrow morning.
(Last week, there was a pre-speech poll, on a post at the Great Orange, asking people if they were going to watch. The winner, by an overwhelming margin, was ‘I’d rather eat powdered glass than watch’. That’s probably how a lot of folks on Wall Street feel.)
i am proud of you for discovering the other side of things.
But I believe that Buffet is saying to buy the bad securities at current market price, which might provide a decent return, not some made up ‘fair’ or ‘hold to maturity’ price. Is there any evidence that Buffet paid a premium?
That implies that Buffet takes at face value Paulson and Bernanke’s assurances that they will not pay inflated prices. That is the part that puzzles me, why would he do that?
Absolutely. That was the point of Glass-Steagle, which everybody forgot. Now we remember.
Great minds think alike! We just got a new freezer too, upright because we’re getting to creaky to bend over and get stuff out of the bottom of a chest. We look on shopping as a full contact sport, and my ideal day at the market is to get nothing but sale items… Large sale items… This week it’s pork loins. Lucky you with cranberries. We almost never see them fresh down here, and there’s nothing like fresh cranberry sauce/muffins/relish/etc.
Ain’t over yet. I forecast the worst will be in the next 4 months. Don’t forget October surprise.
That story is more plausible.
yep, i had to step back for a while, it’s ok. take a breath.
We used to tax wealth. Now we don’t. Wealth should be heavily taxed.
not male friends of the internet but
maKe friends of the internet
Hi there. Not sure what you mean by your comment, but I’ll take it as a compliment. *g*
Why has he ruined the country? Because everything he touches turns to shit. That’s all he knows how to do.
Bush makes shit sandwiches and Boenert refuses to eat them.
Carlyle Group owes more than $20B on Mortgage Security Thingies. And they are calling the margins.
The best thing from the past 8 yrs was the rise of the blogs and FDL… what else?
Heh! Many, many folks assume that eCAHNonomics is a guy because she’s so solidly knowledgeable about stuff most “girls don’t know nuffin’ about.” Some typos just feed into stuff like that!
they are sturdy and not something that is subject to laws, so, if you need cranberries, i will mail you some. lots here. is legal.
dmactree at yahoo
Cranberries in 1 pound plastic bags get shipped everywhere. It’s a standard seasonal supermarket item. I’m surprised you don’t get them.
The jam recipe calls for blackberries (personally picked by me on a you-pickem patch, now in the freezer), cranberries and ruby red grapefruit juice. Never made it before, but sounds like a must try.
Thanks, Marion and STTP. I thought I’d heard on the radio that it’d been up at first. What actually did happen is that it dropped 300 points in the first twenty-odd minutes, then held relatively steady within a few dozen points of the 10,800 mark until 1:40 pm (which was around the time it became clear there would be no deal), when it dropped to 10,480. Fifteen minutes later it was back over 10,800 again, but then entered a yo-yo period and wound up at 10,365.
Thanks so much! I’ll check with Mr. Marion in Savannah and I may be getting back to you on that soon!
This is a response to a point that Ecahnomics has made a couple of times with respect to effects of the Fed printing more money and essentially monetizing the mess. I think that it will cause inflation. She thinks the stuff will find its way into asset markets, because aggregate demand is currently too weak to support commodity inflation. If she’s right about that, I think likely asset to be bid up is money — cold cash. This is what Keynes calls a ‘liquidity trap,’ and what he claimed with some reason existed in the 1930s, and what Krugman has claimed with some reason existed in Japan in the 1990s. What it means is that the money just goes into people’s bank account and stays there for a rainy day.
But in that case the real interest rate can’t fall enough to support growth in aggregate demand, and we are not only in a liquidity trap, we are in an underemployment trap. The solution is to make the real interest rate negative by printing so much money that eventually prices rise. The Japanese Central Bank refused to do this; I doubt very much that Helicopter Ben will refuse. So back to square one. We are likely to see a hair-raising inflation unless some taxes are levied to fund the bail-out. And I think we all agree on whom those taxes should fall.
i had the luxury or the insider whatnot of knowing who she was cuz my dad taught me to watch louis, and didn’t say anything till she did.
and would love to mail you cranberries. so i can have the fruits of them during pull up a chair.
Done!
Don’t forget October surprise.
Hell, at this point no one may even notice.
“Just another day - (yawn)”.
omg can i have the recipe, i truly have never heard of that, ever, echan.
I have a feeling that if/when this passes, it will be another example of what most feel is a disaster, but for Bush and his cronies, another success.
Remember the Norquist quote (paraphrased): To stop social programs, overwhelm the government with debt. There goes any hope of Universal Health Care and who knows what else.
Ding. Could be the classic liquidity trap. We’ll know soon enough. Many have forecast that every time the Fed eases, but it hasn’t happened yet. This could be the time.
Shrub would f*k up a soup sandwich.
I think there is cash around but they don’t know which bubble to play with. They are sitting on it now.
I’ll email it to you.
Here’s my take. He’s failed at everything all his life. He has finally succeeded in something. He broke the yoke.
truly not a problem, is a common thing here…….one of my friends here waits for two things.
peaches, and cranberries……
and have a chutney recipe from another friend for cranberries……..
just write……dmactree at yahoo dot com or ecahn has my email and permission to give it to you.
god i have missed you all so much, i really have.
That sounds delicious — just sweet enough, and just tangy enough. Blackberries you pick yourself are indescribably delicious — way back in 1967 when I spent a year in Germany there was an abandoned house down the road that was overgrown with blackberries. I think I may still have the scars from picking, but oh, my…. I’ll never forget that flavor!
Better than my typing it, here it is:
http://www.amazon.com/gp/reade.....38;go.y=12
i’ve missed you.
well, i have, and others.
feels good to be back here.
am gonna have to go to bed soon.
((((ecahn))))
If not clear, dmac, Marion, the recipe link is in my 70.
Do you know off the top of your head what the highest inflation rate has been in the last 50 years? And when that occurred. Approximately.
Yes. There was a brief spike in oil last week at the first mention of a possible bailout, for the simple reason that the dollar is already very weak — so weak that one reason for the high dollar prices is because OPEC nations are trying to compensate for its weakness — and loading more debt onto the dollar will weaken it further. (There’s been a movement afoot for years among OPEC nations to switch OPEC to the Euro; the only reason this hasn’t happened yet is because Saudi Arabia refuses to allow it.)
Yeah, what the hell’s he gonna do, start another war with no troops and no money?
Thanks.
I’m with Ian Welsh up to a point.
Start small money-wise, to tide over to next administration.
Where I differ, though, is we should buy mortgages of forclosed properties and keep homeowners in their homes. Govt. would hold mortgage, bundled securities would rise in value as bad loans are culled out, therefore taking pressure off banks.
About 14-15% on CPI, in late 70s, early 80s.
Krugman is wrong. Companies get the first $100 million free with no stock warrants and warrants aren’t exactly equity they are an equity based, dare I say it, derivatives.
The Misery Index will show it to you.
Okay the joint McCain/Palin interview is about to play here in Cali. Has anyone else lost 6 minutes (or so) of their lives that they will never get back watching this? How was it?
warren buffet is dead wrong
“a” bailout is necessary, not “THIS” bailout
the bailout that is necessary are those proposed by senator sanders, ian welch and others, NOT the paulson bailout
and we CANNOT let paulson be in charge of this recovery, he helped cause it, he is obviously one of the morons that didn’t see it comming.
buffet’s heart might be in the right place but he is panicking right now, his wealth has taken a hit and he doesn’t like it
he needs to calm down, read the proposals by the grownups and not by the fear monguers and paulson and then he needs to speak about which one is best
the one on the table right now needs help
THINK SHOCK DOCTRINCE
this fall in the market might have even been a planned kick in the butt so we give them more of our money
My 78 to your 73, SouthernDragon.
where i lived down th eroad next to the friend i have talked about with horse farm, we had a pond and right above it was a blackberry patch, and elderberrys, and rose hips from dog roses……..i so miss that……i am not as involved in my acre here as i was there……..
i will send you all the cranberries you want, if you email…….and if things had turned out differently, i was to retire in one year to cape cod to a place where they gathered them……..but that’s ok, i’m in the most beautiful se ohio, accordiong to my uncle, the most varied wildlife, insectlife, and animal life in north america, so, it “ain’t all bad”.
and even though we are behind in most things, we get cranberries and things like that sooner….go figure….
“What if they threw a war, and nobody came?”
Wow, she still sounds like she is woefully over her head. wow.
Thanks, and you too eCAHN.
Yes.
She does babble on about nothing
ecahn–i went to the link–which one is it?????????????????
I went and got Professor Smartass’s graphic from 3 years ago. Somehow, today reminded me of it .
http://photos1.blogger.com/blo.....%202.4.jpg
I don’t want to jam you up here… I’ll check the markets around Thanksgiving so see if we’re getting fresh cranberries. If I’m not seeing them can I send you a panic e-mail between Thanksgiving and Christmas? I’ll understand perfectly if you say “um, not really…” because we’re all swamped during that time.
c’mon, what the hell have i missed in the last month????????
fire it at me.
Maybe he did see it coming and was positioned to pass the easy cash to his buds on Wall Street. It was inside job… and he comes with the mantel of someone serious who understands the problem.
He was the mole Wall Street had inside… their life line.. to quote Sarah Palin.
He should be in jail. A severe conflict of interest and he was caught in secret meetings and conference calls with his buds on Wall Street. He’s a crook.
they are here way before then marion.
I’ve got even money that they’ll find some way of preventing Thursday’s debate. Maybe even by dropping her from the ticket. They have the Eagleton precedent, and she can come up with a “family emergency,” possibly that shotgun wedding folks have been speculating about.
In case he gets upset soon.. you might want to hang onto this linky…) Welcome blog home, dmac.
Interesting. The link doesn’t change when you click on the actual page. I didn’t realize that. It’ #10. Marion, too.
OK, here goes:
The good news is that Sarah Palin is the Republican VP nominee. The bad news is that Sarah Palin is the Republican VP nominee. McCain managed to find the single most ill-informed human being(of either gender)on the North American Continent. Period.
gotta go, take care pups……
((((ecahn marion))))
On Fed balance sheet: my recollection was that they control the size of it themselves, through the Open Market Committee. That’s what it seems to say here (p.5; pdf recommended if you actually want to, like, read it), pgraph beginning “The overall size of the Federal Reserve’s portfolio of domestic securities is dictated by the FOMC’s monetary policy objectives.”
Would 10 pounds, in those lovely 1-pound bags, be doable? Let me know at mgpaquin AT aol DOT com. And because I’m brutal with my spam filter please make sure “cranberry” or “cranberries” is in the subject line so I can pull you up from where that filter will dump you!
Thanks — beat me to it!
got it, palin, palin, meaning pale-in toby, ecahn love the recipes, marion, love youm, jayt-every time i send a personal note you disapear from a thread,a coincidence??????????????
love you guys, may be back………gotta eat.
got it.
I still say she’s gonna call in and say the rabbit died and she’s so overwhelmed with joy she can’t make the debate and, oh, by the way, I’m withdrawing from the campaign.
With some honest thinking we can come up with a workable solution to this mess. The “honest” is gonna be the hard part.
OT - wanna watch David Shuster blow up the “John McCain invented the Blackberry” top economic advisor?
http://talkingpointsmemo.com/archives/220700.php
Paulson’s plan did nothing to address the underlying causes of market instability, the distressed homeowners whose foreclosures are flooding the market with houses and driving their value and the value of any instrument based on them down and the higher order derivatives that have made moral hazard and rational decision making and planning impossible. It was Paulson’s blindness to these and his attempt to funnel $700 billion to people quite like him that poisoned the deal. His plan was to use the money not for a soft landing for us but his friends. That to me is both a bailout and a sell out.
If you need Cranberries I would be glad to send them. We, California, start to get our sometimes as early as October. Would be glad to help if needed.
I know a couple folks make a box of rocks look like a theoretical physicist.
Great Teddy post
That thief Paulson is a master of detail and he makes enormous amounts of money.
This guy must not know how to count. Dem majority for, Rethug majority against. Because they got their feelings hurt? These guys wouldn’t know the truth if it put a foot up their ass.
As an ex-financier I believe that we need a bailout, althought not the one on offer (there are a number of fundamental problems with the bill that died.. the discretion to reduce reserve requirements to zero when combined wit toxic asset purchases incentivizes bad benavior, for example). Priming the pump/opening the Fed window wider/OMO’s etc, and some of the other things the shrub admin is now proposing are a recipe for structural disaster. These actions, if not undertaken in conjunction with a structural adjustment (the bailout) could end up further reducing the effectiveness of the Fed actions going forward, even as we are heading into very rocky waters. It is my belief that we have to get Congress back to work to craft a true Democratic bailout bill.
Wall Street couldn’t get a $750 billion bailout, so it lost $1 trillion. Can someone explain the wisdom of the markets to me again?
I’m not taking the Palin bet. But, how’s she going to get out of it?
Anyone feel the country shifting? I think McC is becoming universally loathed. Or maybe it’s just me.
Warren Buffet now has an investment in Goldman Sachs.
He’s not exactly a disinterested party either.
I think the Rs detest McC and they tied Bush right around his neck today.
the toxic assets targeted by the bailout is the first piece of a very long chain of causality.. the first domino if you will, or at least the first domino likely to fall. That chain totals many trillions… some say up to $5 or $7 trillion in potentially destroyed value.
sorry.. that last was a reply to #115
jayt i’m starting to feel like a floozy…..
meet up-oct 12th weekend, your turf…….
dmactree at yahoo.
and i left because the squirrels were getting annoying, and the links to the next space led to nowhere and not bac k here, and i just went to the link egregious left to teddy and lo and behold it was to another plqace.l
until there is a link back to where we came from i will not be a participant. too aggravating……i have repeatedly said for fdl to hav ethe calendar be back, to make it easier to go through treads that i missed, that is not happening, so, you go to a week ago, have to do a threqad by thread link, get to one thatisnot fdl, and have to start your search all over to get back to the next one…..
not my bag. and not what i thought this place was all about. i haven’t been ihere for blue america or book salon in a while. which means my money hasn’t either.
i spent three weeks trying to get in here and gave up and then when i could, i was led away to threads i did like, but didn’t have a direct link back to fdl……..no likey.
i had a few things set for oxbow when it launched, i see it has, but i just linked there and it didn’t have a way back to fdl, and it replaced the newsbox, i don’t see that as a good thing…..
that’s a fact.
and my opinion didn’t seem to matter. so there we are. was checking back in to see if the servers were finally serving me.
they are, so the other things can wait, but that doesn’t mean that they don’t matter….
how many are aggravated by the inconvenience of links not linking back to fdl?
dmac, we do our best to provide links back to FDL posts from partner blogs. Oxdown is a new experiment to provide a much greater voice to all folks here — we have already had terrific posts from people like Nahant and RevDeb and Massacio — surely this is worthwhile?
Both IE and Firefox have tabs so you don’t have to do all that. Don’t know about Safari. Switch between tabs, refresh, voila.
Seems to me that this really is a blatant shakedown by Wall Street. That does not mean that an intervention is not necessary, just that the one they want is bullshit. Krugman, Delong, and Roubini seem to agree that what we should do the nationalize the troubled institutions by buying controlling interest in priority shares so taxpayers get paid back before anyone else benefits at all. Also caps on executive compensation and a clawback of bonuses, stock options, and other extra compensation for the past several years. I would add sacking all current senior executives and permanently banning them for holding an executive position in any publicly held company and charging them with criminal fraud if possible. Bankruptcy reform to allow judges to reset mortgage terms on primary residences as well. These sound like a much better proposal than anything that is currently on offer.
Yes, Safari has tabs as well.. and if you don’t use tabs, just click the back arrow on your browser.
I should think your own reasoning faculties should suffice. Reason perforce compels one to concur with Newberry’s assessment.
While Sanders and Ian fiddle, Rome burns. My money, if I had any after yesterday, goes with Buffett and Krugman - and Knut.