Great comments on the bank bailouts at cnnmoney.com
Viking
CNNMoney.,com asked "Are Fed rate cuts and the Bear Stearns bailout
helping or hurting the economy?"
http://money.cnn.com/2008/03/17/markets/thebuzz/index.htm?postversion=2008031711
and got blistering feedback at
http://cnnmoneytalkback.blogs.cnnmoney.cnn.com/2008/03/17/big-bailouts-the-real-march-madness/
Here's a sampling:
-------------------------------------------------------------------------------
Seems that “old crackpot” Congressman Paul knew what he was talking
about all along. Maybe return to the gold standard isn’t the answer,
but stable currency obviously requires something better than an “air
standard” which seems to be the only one the Fed uses.
Posted By FadingFast, Bay Area, California : March 17, 2008 2:29 pm
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WELL ITS NICE TO SEE THAT THE FED IS ACCEPTING FOR COLATERAL ALL THE
BAD DEBT THAT THESE BANKS HAVE ACCUMULATED. SO WHEN THEY DEFAULT WHO
GETS STUCK WITH THE BILL GEE.. THE TAXPAYER. THE ONLY THING IS THAT
THE 800 POUND GORILLA IS NOW THE 8000 POUND GORILLA SO MR. JIM JONES
BERNANKE WITH HIS COOL AID TRYING TO HELP IS JUST KILLING OFF MORE OF
HIS FLOCK. WITH MORE HELP LIKE THIS THERE WON’T BE MUCH OF AN ECONOMY
LEFT TO SAVE.
Posted By JOHN CARR NORTHBRIDGE MA. : March 17, 2008 2:05 pm
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Like a typical economist, Spock glosses over the fact that the
“players” are playing with other people’s money - not theirs! In
economic speak this would be deemed an “externality” - not even
factored into the economic equation employed by them - that it doesn’t
make any difference!
In the short-term cutting rates is merely an attempt to put a finger
in the dike and buy more time by ostensibly providing more liquidity.
In the longterm this devaluation of the $ means lower standards of
living for most of US.
As one individual has already astutely observed though, this “free
market” works only one way - profits are privatized and costs are
socialized by design. It is a wholesale transfer of wealth to the few…
a type of capital accumulation that will be invested in international
markets. But all the costs - bankruptcy, home foreclosure,
unemployment, inflation, etc. will be borne by US. Das Kapitalism! Has
anyone ever contemplated a viable alternative? Until we do get used to
it!
Posted By Mickey, Akron, Ohio : March 17, 2008 2:03 pm
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I’m not sure where Spock in Miami got his info
“Unlike most of the commentators below, I get it. Maybe that’s because
I’m part economist.”
But this is exactly how Bush’s aids explained the problem to him this
last weekend… He finally got it on the secound go around….
Posted By Chris, : March 17, 2008 1:59 pm
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Are Fed rate cuts and the Bear Stearns bailout helping or hurting the
economy? The effects of the rate cuts in a market where credit markets
are tight essentially only helps the banks who can borrow money
directly from the Fed or those who can use the money abroad in
countries with a higher interest rate. Their actions serve to only
delay the inevitable and further destablilize the economy. For the
majority of hard working conservative Americans, the Fed’s actions
amount to a knife in the back. On the premise of helping America,
their actions have decreased the value of the dollar, increased the
cost of commodities to all time highs, resulted in lower savings
interest rates, higher bond prices leading to increased cost of long
term rates (higher mortgage costs), etc. To what end? To help
irresponsible and greedy financial institutions, housing sector,
housing speculators, and home owners who can’t take responsibility for
their actions. This is the end result of Greenspan and Bernanke’s
attempt to manipulate the economy. Let those who caused the financial
doldrums bear the cost. If these same institutions feel they can still
pay their under-performing CEOs tens or hundreds of millions of
dollars after taking billions in losses, let them suffer the
consequences and liquidate the entity as an example. Should the gov’t
step in, then it should levy a heavy cost for the support as in the
case of the Chrysler Bailout of the 80s where the fed received shares
or warrants in Chrysler which it then sold at a substantial profit.
Its time for the government to quit plundering the majority of hard
working middle class Americans to prevent or lessen the self inflicted
woes of the irresponsible affluent who normally decry government
intervention and the ignorant who should never have been provided
loans in any form because of their financial immaturity.
Posted By Ty, Honolulu, Hawaii : March 17, 2008 1:53 pm
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Megan, San Ramon CA: By the way, how do I let our government know this
is bogous, and they need to stop the charade of devaluing my savings.
Is there a petition out there?
Answer: Vote Libertarian and say no to both corrupt big government
parties. We need to stand up to the status quo.
Posted By David, Laramie, WY : March 17, 2008 1:52 pm
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When are we going to ban together and take our money and power back?
This country was founded upon these principles - as true today as it
was back then. While we’re not dealing with the British Monarchy
taxing us without representation…it’s the corporate entities and
illegal agencies raping us now instead. It took much less to spark
action way back then, will it take Chinese ownership of America to
wake us up?
Posted By Thomas Jefferson, Somewhere in Virginia : March 17, 2008
1:49 pm
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The President says we all need to save more as the corner stone of a
healthy US economy. So why not give savers a tax break and promote
saving. Might suggest a tax break something like we had many years ago
for those who carried a balance on the credit card. Promote savings
rather then bailout incompetent Wall Street and corporate managers. In
the long term savings will fix the US economy and strengthen the
dollar.
Posted By Norm, Salem, Or : March 17, 2008 1:30 pm
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What we are living through now is a result of a crisis in confidence.
How can anyone trust our business and political leaders when they tell
us everything is under control. We have heard that from the likes of
Enron, Countrywide and Bear Stearns just before they have cost our
investments and retirements hunderds of billions of dollars and untold
heartache.
Sadly, the only thing I trust now is a piece of gold or silver. The
dollar may as well portray an image of Charles Ponzi.
Posted By Ross K., Wells ME : March 17, 2008 1:28 pm
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America, we have been high-jacked by Corporate interests, bankers and
lobbyists.
Do the right thing in November - vote for whomever is not currently in
office unless you know they are doing an absolutely great job for the
people!
We need to tke our country back from the robber-barons!
Posted By Dave, CT : March 17, 2008 1:23 pm
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The banks gambled and won lots of money in the beginning. Like a bad
Vegas bet they became greedier. They lost. Now they have to pay back
their markers. They cannot. Too bad. The casino owner gives them a
bigger loan and finances it by charging admission to the casino and
increasing food and drink in the restaurants. Now the regular patron
is paying for the gambler.
Gambler…Bears Stearns/patrons….. taxpayer/casino owner….Ben…King pin
Bush
Posted By wally Vegas nevada : March 17, 2008 1:22 pm
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Has anyone noticed how wonderfully helpful the Fed has been for the
average American? I bought a home in early January before all the
drastic, emergency rate cuts were given out. Since that time, the Fed
rate has dropped nearly 2%. I got my mortgage rate at 5.5%, which was
terrific, but now government lending rates are lower and no one can
get a mortgage for that cheap anymore? Why is that?
I understand that there is a credit crunch and that money/credit is
apparently tight. But when did this become the average consumers
fault. We see people defaulting on mortgages they clearly couldnt
afford, who just walk away. Banks raise rates/fees that they charge on
current mortgages and accounts, yet are unwilling to increase their
savings/401K/IRA account earnings. Something seems a little wrong
here.
Either I fell off the short-bus or we really are in a bad place. It
seems as though we are in a lose-lose situation and that banks,
retailers, foreign governments are trying to squeeze every last
(worthless) dime out of us. Clearly market dynamics are not working
anymore and what I think should happen should be a focus back on the
consumer, not Wall Street. When was the last time you heard anything
about the Fed concentrating on the average American, not some
investment bank who made a bad bet? I dont want to have my tax dollars
funding something that amounts to a bail-out of these companies who
took bad bets and lost. Tough, you dont think the same thing is
happening to millions of Americans right now? About to lose their
homes and all you can do for them is tell the ones who cant afford it
to just walk away and screw over all the hardworking ones? For the
first time in my life, I am almost sick of living here.
Posted By Donald, Atlanta, Georgia : March 17, 2008 1:17 pm
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Hey, FOMC…whatever happened to Capitalism?
Stop bailing out investors/banks with our tax money.
Posted By Adam, Greensboro, NC : March 17, 2008 1:17 pm
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Interest rate cuts, whether to held the credit crunch or market are
bad for the average american and good for the wealthy. Low interest
rates and wealthy greed got us here. Let the market run its coarse and
let the greedy take their hits…
Posted By Don Heath, Portland, Me : March 17, 2008 1:11 pm
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IOUSA, coming soon!
http://www.agorafinancial.com/iousa.html
Posted By Aaron, Texas : March 17, 2008 1:03 pm
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For Spock_rhp-
It isn’t so much that “we don’t get it.” It’s such that “we don’t like
it.”
The problem with the global poker game is that it isn’t so much a game
among other games in which to choose, as it is a dominant system that
forces us to play. The 1 game becomes life…and that, to an economist
or any successful player, is a royal flush.
Posted By MIchael Ny, Ny : March 17, 2008 1:03 pm
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Well the Fed does what’s good for Wall Street and not Main Street at
we the common tax payer gets to pick up these costs not the big guys
who caused all these problems. You’ll have to go look but the M3 money
supply is up 30% in the last 6 months and so when our friend Ben
Bernanke says inflation is under control it’s so you don’t panic as
inflation not core CPI will be running 10% or better this year. One
way to make these losses less painful and to artificially boast houses
prices is to have high inflation. Then these over bloated homes look
like they are worth what the prices climbed too. Be ready to suffer
for the rich and Wall Street so they can stay on top along with our
political elite.
Posted By Steve V. Maryland : March 17, 2008 1:01 pm
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What I do not understand is why You “CNN” Have not printed this story
A year and a half ago? Two years ago?The working class have had our
incomes eroded, Yet until it hits those rich enough to invest in the
stock market, Speculate in housing. The economist from “CNN” continued
to preach everthing is fine??????
Posted By Gary Kempf, Morrisville,NC : March 17, 2008 12:51 pm
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YES, THEY ARE KILLING MY MONEY MARKET AND CD ACCOUNTS. SINCE I AM ALL
BUT OUT OF THE STOCK MARKET I AM MAKING 0 OR LESS ON MY INVESTMENTS.
WHAT DOES THAT DO TO A PERSON 62 YRS OLD. ???
PAUL THOM
Posted By PAUL THOM GRAND JCT, CO : March 17, 2008 12:49 pm
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The FED’s policy of lowering the rates is out of time. We are a debtor
country and no longer a creditor one as we used to be. Lowering the
rates will help 1 million irresponsible home buyers (who shouldn’t
have bought in the first place) and hurting the other 299 millions of
us.
Posted By Indianapolis, Indiana : March 17, 2008 12:48 pm
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Of course this amounts to a taxpayer bailout. But what is EXTRA unfair
is that all of the investment bankers have been patting themselves of
their own backs with multi-million dollar bonuses and fees due to the
“risky business” that they were involved in. Now it seems that there
is no risk to them at all as they are protected from up on high.
Unfair!
Posted By Todd D. Santa Cruz, CA : March 17, 2008 12:44 pm
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The collapse of the dollar is an unmitigated disaster. The role of the
US dollar as the defacto world reserve currency has brought benefits
to this country that would be hard to exaggerate. The hardship
associated with a recession, which is probably just the medicine the
economy actually needs, is very mild compared to the likely
consequences the US will suffer as a long term result of a major
international currency realignment. The Federal Reserve Board should
be raising interest rates as a signal to the world that we will
protect our currency, a lot of which is actually theirs through
massive foreign holdings of US debt instruments. We are playing with
fire trying to bail out everyone and keep full employment. It won’t
even work in the end anyway. We must eat bitter fruit and restore our
economic integrity.
Posted By Robert Rice, Simi Valley, CA : March 17, 2008 12:41 pm
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Did any of us really doubt that Washington would offer a self-serving
bailout-help to its Wallstreet breathren?
If you pay your mortgage ontime and you attempt to save money, you’ve
just been slapped in the face. The clear message here is that
extensive credit, overspending and risky investments are rewarded.
Posted By Marcus, Vallejo, CA : March 17, 2008 12:36 pm
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Unlike most of the commentators below, I get it. Maybe that’s because
I’m part economist.
The big firms that took excessive risks are indeed being shaken out as
they should. Bear Sterns was once $147 a share and was sold at $2 in
an “arranged marriage”. Countrywide similarly lost about 90% of the
shareholder’s value in its sale to Bank of America.
This is what is supposed to be happening.
***
Now for the Bear deal — think of the world financial scene as huge
games of poker. Bear was one of about 20 dealers worldwide. The
dealer’s job is to guarantee that all of the other players in the game
can actually afford to make the bets they want to make with each
other.
The players in the game are all the farmers, ranchers, stores of every
kind, lumber outfits, cattle buyers, feedlots, and all of their major
customers worldwide.
Bear had maybe $30 billion in capital and loss reserves. The betters
whose deals it had approved have bets totaling $300 billion or more.
Bear and the other dealers weren’t making book [taking the other end
of the bets], but simply assuring that betters [who mostly don’t know
each other] can afford the bets they’ve made.
The bets are much more complex than in simple 7 card draw poker —
betters were also betting on every combination possible [who will draw
the ace of spades, for example].
While the game was underway, after bets were made but before the next
round of cards were drawn, Bear [the dealer and guarantor of the
players’ ability to play] had a heart attack.
Now the situation is that either some other dealer [Morgan in this
case] steps in to take over Bear’s games, or all the players in all of
Bear’s games start grabbing as much of the pot as possible — and if
someone isn’t fast enough [or doesn’t have a nasty enough government
backing their play], well — tough!
Since all the players in the Bear games are also players in all of the
other 19 dealers’ games, the resulting ruckus would end up with every
player in every game trying to grab as much as possible and then some
of the players would end up shooting other players simply because they
think they can get away with it.
The sheriff [Federal Reserve] and the Judge [Treasury Department]
aren’t about to have the players killing each other over the bets at
the Bear Sterns tables — those players are the same outfits that
handle 75% of world trade and that world trade is 30% of all American
jobs.
If the games come to a screeching halt with everyone grabbing for the
pot, the Depression begins.
Posted By Spock_rhp, Miami, FL : March 17, 2008 12:31 pm
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Are Fed rate cuts and the Bear Stearns bailout helping or hurting the
economy?
The Fed rate cuts are nearing their end: they will stop at 2%, which
is 0% real interest rate, probably by the end of June. Then, we wait.
The Bear Stearns situation is hardly a bailout: the stock went from
$159 to $2 in less than a year. The company has been punished enough.
By facilitating the transfer of Bear assets and liabilities in total
to JPMorgan, the Fed is just giving Bear a ‘Christian burial’. RIP,
Bear.
This sends a powerful message to the other investment banks to clean
up their acts quickly.
It would not be surprising to see one or a few more of these, but it
looks like we’re almost done here.
Posted By Mike, Redwood City, CA : March 17, 2008 12:28 pm
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In answer to the question “where does the Fed get the money they give
out”, I’d imagine fully half the people in this country think that our
government, the Fed included just MAKE money. I see evidence in the
newspaper, on television…tax increase to fund 1/2 of new complex and
the government is chipping in the rest. Guess what, our government
doesn’t make anything, they take our dollars from a list of taxes too
long to list and then borrow from today’s friends, tomorrow’s
potential enemies because it still isn’t enough. Technically, we all
own a share in these failing financial institutions and I don’t know
about you, I don’t like that one bit!
Posted By Jim, Cleveland, Ohio : March 17, 2008 12:28 pm
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With all the hoopla about lowering rates, why haven’t the long term
rates come down to offer some relief to the consumer (i.e us little
folks)??
It appears that the Bush administration is just concerned about
helping their financial buddies.
Posted By Dan, Walnut creek : March 17, 2008 12:24 pm
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We were said that so called “investors” which are actually just
speculators in many cases have much less federal tax rate then working
people because, they are risking their money. Now it seems there is
almost no risk for them at all. They can be involved with whatever
gambles they like - our government will bail them out.
Posted By Paul, Boca Raton Florida. : March 17, 2008 12:23 pm
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I am absolutely appalled at the government’s numerous attempts to
bailout the greedy institutions at the expense of me! a regular
tax-payer. How are they injection the hundreds of billions of dollars
and now the bailout of Bear Sterns. Let the free market take its
course so it will correct itself.
By the way, how do I let our government know this is bogous, and they
need to stop the charade of devaluing my savings. Is there a petition
out there?
Posted By Megan, San Ramon CA : March 17, 2008 12:22 pm
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Question: Ever wonder why failed corporations are escorted to safe
harbor by the federal government and failed individual investors and
small business owners are left out to twist slowly in the wind for
their poor financial decisions?
Answer: The American Government is a wholly owned subsidiary of
multinational corporations, their lobbyists and their interest groups.
They will go to any lengths to protect their own. Individual investors
and small busineess owners are not part of that club
Solution: The American People need to take back control of their own
government from these corporate interests. Wake up America! You can’t
keep doing the same old things over and over and expect different
results.
I believe someone defined that as insanity
Posted By Robbie Coltrane, Atlantic City NJ : March 17, 2008 12:20 pm
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Definitely hurting the economy.
Bernanke and the FED are incompetent morons. The more they lower rates
and give the banks large sums of money, the less our saved dollars,
interest income, and regular income dollars are worth. As the cost of
necessities continues to rise, more and more hard-working honest
people will struggle to make ends meet. Some of these people will end
up not able to pay their mortgages.
Meanwhile, greedy bankers that caused this mess in the first place are
bailed out and rewarded. It is quite disturbing and disgusting.
I am worried that my substantial life savings that I have worked very
hard to build will be worthless soon. Instead of living below my means
and saving money every month, I might as well have been like everyone
else and lived above my means and borrowed money every month.
The stupid and greedy are rewarded and bailed out again and again
while the smart and honest are penalized again and again.
Posted By Richard, SLC, Utah : March 17, 2008 12:08 pm
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If everyone thinks the rate cuts and diminishing of interest earnings
on savings accounts is bad now, wait until Paul Krugman is right and
the Fed institutes a Zero Interest Rate Policy. Then watch your
savings erode.
And if our ZIRP is anything like Japan’s period of ZIRP (2001-2006),
it could be an extended period of time before we see any interest
earnings on savings accounts be realized again.
Man, those Series-I Savings Bonds are looking good right now. Then
again, that’s just giving money right back to the Fed.
Posted By Brian, Lawrenceville, GA : March 17, 2008 12:05 pm
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This loose monetary policy is killing us softly. Instead of hurting
the banks and borrowers that gambled on interest rates, it is hurting
everyone.
Every time interest rates go lower, so does the dollar. Weaker dollar
means higher oil prices. Oil at $110/barrel is only an American
problem. Europeans are only paying 70 Euros per barrel. It wasn’t that
many Fed rate cuts ago that 1 dollar equalled 1 Euro.
Posted By CJ, Phoenix, AZ : March 17, 2008 12:00 pm
--------------------------------------------------------------------------------
Since there is a lag on when rate cuts begin to have an effect, I
would say it is too soon to say. But isn;t lowering the rates one
reason why we are in the current economic crisis? Surely, the main
reason is American consumer culture- buying on credit, buying for
buying’s sake (hobby?). But, as the rate lowers and inflation rises,
we shall see (already seeing) consumers spending less. I hope the rate
cuts hurt- they need to hurt…we need a reminder that capitalism isn’t
impenetrable.
Where is the media when it comes to advocating for the consumer? The
Fed is lending=giving banks billions of dollars to save their butts in
what I like to call the false-claimed-free-market, while consumers
(which=75% of the economy) are getting a rebate = to pennies when you
take inflation into account. The government is truly playing a
psychological game with the average American and there are no mass
media players willing to raise awareness on how much Americans are
getting taken advantage of- of course, this isn’t limited to
American’s getting taken advantage of- foreign laborers have it a lot
worse than we do.
Posted By Michael NY,NY : March 17, 2008 11:45 am
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This can all be summarized by “privatize profits and socialize
risk/loss”, that history has proven time and again. Wall St made hefty
profits on fees and packaging and selling financial “toxic waste” to
“investors” (socializing risk). However not being able to sell all of
it they got caught with their “pants down” and now the Govt is bailing
them out, with our money of course (be it tax dollars, or inflation) -
step 2 of socializing loss.
Posted By L. Bitincka, SF : March 17, 2008 11:44 am
--------------------------------------------------------------------------------
Funny, several years ago the concern was that we were not saving
enough and it was hurting the economy. Now they continue to drop
interest rates and savings vehicles are not good, housing is not good,
the stock market is not good, food prices are up, gas is up, financial
companies who raked in big bucks on our backs are failing, and the
government is keeping a weak dollar so imports that they told us was
good for the world economy are rising. Good thing they really care for
us.
Posted By Pueblo, Colorado : March 17, 2008 11:44 am
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It’s not just the rate cuts, it’s also the billions of dollars the Fed
is extracting from taxpayers–they’ve created hundreds of billions of
dollars out of thin air so far this year, devaluing the dollars people
earn, and they’re bailing out the banks by letting the banks use bad
mortgages for collateral–which means the taxpayers are paying for
those loans. The bailouts have, so far, cost each individual taxpayer
something like $3,000.
Posted By Edward, Boston, MA : March 17, 2008 11:41 am
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Here’s a question for you - where does the Federal Reserve get all
this money to bailout all these people. Ever wonder that?
Posted By Anonymous : March 17, 2008 11:39 am
Society
"Viking" <no...@goodgoodbye.com> wrote in message
news:qejtt3ljm273g5q05...@4ax.com...
>
> CNNMoney.,com asked "Are Fed rate cuts
> and the Bear Stearns bailout helping or hurting
> the economy?"
> http://money.cnn.com/2008/03/17/markets/thebuzz/index.htm?postversion=2008031711
The writer of that article isn't just another pretty face,
he's got a bachelors degree in {drum roll} psychology.
See Paul R. La Monica's official CNNMoney.com bio at:
<http://www.timeinc.net/fortune/information/presscenter/cnnmoney/bios/CNN_LaMonica.html>
Hmmpf!
Some money expert, eh?
> and got blistering feedback at
> http://cnnmoneytalkback.blogs.cnnmoney.cnn.com/2008/03/17/big-bailouts-the-real-march-madness/
>
> Here's a sampling: [...]
My favorite among all those responses you posted
for us, Viking, is this one:
> Are Fed rate cuts and the Bear Stearns bailout helping
> or hurting the economy?
>
> The Fed rate cuts are nearing their end: they will stop
> at 2%, which is 0% real interest rate, probably
> by the end of June. Then, we wait.
>
> The Bear Stearns situation is hardly a bailout: the stock
> went from $159 to $2 in less than a year. The company
> has been punished enough. By facilitating the transfer
> of Bear assets and liabilities in total to JPMorgan,
> the Fed is just giving Bear a 'Christian burial'. RIP, Bear.
>
> This sends a powerful message to the other investment
> banks to clean up their acts quickly.
>
> It would not be surprising to see one or a few more
> of these, but it looks like we're almost done here.
>
> Posted By Mike, Redwood City, CA : March 17, 2008 12:28 pm
IMO, Mike was far more perceptive than most of the
other commenters. He noticed that the question posed
by the CNN newshounds was pregnant with a false
premise, that Bear Stearns had a "bailout". Gee,
if ever I have a stock sold out from under me at a
98.5% loss ($147/share to $2) I'll know that I'm
supposed to be pleased that I was "bailed out"
according to Time and its subsidiary CNN. (Sheesh.)
I expect there will be lawsuits from disgruntled
Bear Stearns shareholders over J.P. Morgan's
$2/share takeover of Bear Stearns (a firm whose
book value was recently estimated to be $84/share)
that will be winding through the courts for a decade
or more. The deal sure looks sweet for J.P. Morgan
tho'. The US central bank guarantees Morgan
against any losses if Bear Stearns' assets really do
turn out to be sour and Morgan gets to keep all the
gains if the assets end up in the black (which I
expect will be the case once all is said and done).
You've probably been following all this, Viking,
but for those who haven't, see:
J.P. Morgan Buys Bear in Fire Sale,
As Fed Widens Credit to Avert Crisis
by Robin Sidel, Dennis K. Berman, and
Kate Kelley
_The Wall Street Journal_
March 17, 2008; Page A1
<http://online.wsj.com/article/SB120569598608739825.html>
Now, lemmee go look and see how JP Morgan Chase
stock did in Monday's trading...
--
I have enough money to last me the rest
of my life. Unless I buy something.
"lnthomp" commenting on "ABC's 'Sic' Choice
Suggests Belief in Afterlife an Error"
_NewsBusters_, January 1, 2007; 21:02
<http://newsbusters.org/node/9898>