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#1 Dark Angel

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Posted 26 September 2008 - 07:12 AM

I can't believe this isn't being discussed yet (in it's own topic). Latest news. [hide=Politicians can't agree on anything to fix this.]Amid GOP revolt, bailout deal breaks down


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Sep 26, 2:50 AM (ET)

By JENNIFER LOVEN and JULIE HIRSCHFELD DAVIS

(AP) Talking on his cell phone, Secretary of the Treasury Henry Paulson enters the Capitol for a late...
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WASHINGTON (AP) - A Republican rebellion stalled government efforts Thursday to avoid economic meltdown, a chaotic turnaround that disrupted the choreography of an extraordinary White House meeting meant to show joint resolve from the president, the political parties and the presidential candidates. Instead, the summit broke up so bitterly that Treasury Secretary Henry Paulson got on one knee before Democratic leaders in a theatrical attempt to salvage talks.

After six days of bare-knuckled negotiations on the $700 billion financial industry bailout proposed by the Bush administration, with Wall Street tottering and presidential politics intruding six weeks before the election, there was far more confusion than clarity.

An apparent breakthrough was announced with fanfare at midday by key members of Congress from both parties - but not top leaders. Wall Street cautiously showed its pleasure, with the Dow Jones industrials closing 196 points higher.

But the good news and the market close were followed by a rash of less-positive developments.


Washington Mutual Inc. (WM) was seized by the Federal Deposit Insurance Corp. in the largest failure ever of a U.S. bank, after which JPMorgan Chase & Co. (JPM) Inc. came to its rescue by buying the thrift's banking assets.

And the late-afternoon White House gathering of President Bush, presidential contenders John McCain and Barack Obama, and top congressional leaders turned into what one person in the room described as "a full-throated discussion" and McCain's campaign called "a contentious shouting match."

Conservatives were in revolt over the astonishing price tag of the proposal and the hand of government that it would place on private markets.

Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee, emerged from the White House meeting to say the announced agreement "is, obviously, no agreement." McCain's campaign issued a statement saying, "the plan that has been put forth by the administration does not enjoy the confidence of the American people as it will not protect the taxpayers and will sacrifice Main Street in favor of Wall Street." The White House, too, acknowledged there was no deal, only progress.

Meanwhile a group of House GOP lawmakers circulated an alternative that would put much less focus on a government takeover of failing institutions' sour assets. This proposal would have the government provide insurance to companies that agree to hold frozen assets, rather than have the U.S. purchase the assets.


(AP) President Bush, center, meets with Republican presidential candidate Sen. John McCain, R-Ariz., far...
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Inside the White House session, House Republican leader John Boehner announced his concerns about the emerging plan and asked that the conservatives' alternative be considered, said people from both parties who were briefed on the exchange.

Financial Services Chairman Barney Frank, the feisty Democrat who has been leading negotiations with Paulson, reacted angrily, saying Republicans had waited until the last moment to present their proposal.

McCain, who dramatically announced Wednesday that he was suspending his campaign to deal with the economic crisis, stayed silent for most of the session and spoke only briefly to voice general principles for a rescue plan.

After the session, Paulson, hoping to prevent any chance for agreement from being torpedoed, pleaded with Democratic leaders not to publicly disclose how poorly the session had gone, said three people familiar with the episode. Frank and House Speaker Nancy Pelosi responded angrily, and Paulson, in an attempt to lighten the mood, got down on one knee, said the sources who spoke on condition of anonymity, like the others, because the conversations were private.

Weary congressional negotiators then resumed working with Paulson into the night in an effort to revive or rework the proposal that Bush said must be quickly approved by Congress to stave off "a long and painful recession." They gave up after 10 p.m. EDT, more than an hour after the lone House Republican involved, Rep. Spencer Bachus of Alabama, left the room.


(AP) President Bush, fourth from left, meets with Republican presidential candidate Sen. John McCain,...
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Talks were to resume Friday morning on the effort to bail out failing financial institutions and restart the flow of credit that has begun to starve the national economy.

The Bush administration plan's centerpiece remained for the government to buy the toxic, mortgage-based assets of shaky financial institutions in a bid to keep them from going under and setting off a cascade of ruinous events, including wiped-out retirement savings, rising home foreclosures, closed businesses and lost jobs.

The earlier bipartisan accord establishing principles and important details would have given the Bush administration just a fraction of the money it wanted up front, subjecting half the $700 billion total to a congressional veto. The treasury secretary would get $250 billion immediately and could have an additional $100 billion if he certified it was needed, an approach designed to give lawmakers a stronger hand in controlling the unprecedented rescue.

The Bush administration had already agreed to several concessions based on demands from the right and left, including that the government take equity in companies helped by the bailout and put rules in place to limit excessive compensation of their executives, according to a draft of the outline obtained by The Associated Press.

Democrat Obama and Republican McCain, who have both sought to distance themselves from the unpopular Bush, sat down with the president at the White House for the hourlong afternoon session that was striking in this brutally partisan season. By also including Congress' Democratic and Republican leaders, the meeting gathered nearly all Washington's political power structure at one long table in a small West Wing room.


(AP) Senate Banking Committee Chairman Sen. Chris Dodd., D-Conn., center, speaks during a news...
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"All of us around the table ... know we've got to get something done as quickly as possible," Bush declared optimistically at the start of the meeting. Obama and McCain were at distant ends of the oval table, not even in each other's sight lines. Bush, playing host in the middle, was flanked by Congress' two Democratic leaders, Pelosi and Senate Majority Leader Harry Reid.

But neither Bush, McCain nor Obama have been deeply involved so far in this week's scramble to hammer out a package. The meeting was intended more to provide bipartisan political cover for lawmakers to support a plan in the face of an angry public and their own re-election bids in six weeks.

At day's end, Frank said he told Paulson "this whole thing is at risk if the president can't get members of his own party to participate."

Layered over the White House meeting was a complicated web of potential political benefits and consequences for both presidential candidates.

McCain hoped voters would believe that he rose above politics to wade into nitty-gritty and ultimately successful dealmaking at a time of urgent crisis, but he risked being seen instead as either overly impulsive or politically craven, or both. Obama saw a chance to appear presidential and fit for duty but was also caught off guard strategically by McCain's surprising campaign gamble.

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Associated Press writers Deb Riechmann, Martin Crutsinger, Christopher Wills and Beth Fouhy in Washington and researcher Judy Ausuebel in New York contributed to this story.
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Three large companies have recently failed; AIG, which was bailed out by the government, Wamu, which was bailed out by another bank, and some othe company I don't remember. So what is this? Are we going to go into another depression and be forced to eat potato skins with ramen noodles? Should we be getting all our cash out of the bank and turning it into gold? Go about life as if nothing is wrong and wait for "someone else" to fix it? How will it effect other countries? Will it effect them enough to damage them? This could be the next big chapter in the history books, let's discuss what's going on.
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#2 Barack Obama

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Posted 26 September 2008 - 08:44 AM

Revolution in the U.S.A.!!!! yeah rock on

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#3 Randy Moist

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Posted 26 September 2008 - 09:12 AM

I'm investing in DietCoke

Also 'We Deserve It Dividend', is obviously the optimal solution. Why can't Congress get anything right? :fogetpinecone:

#4 Barack Obama

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Posted 26 September 2008 - 09:19 AM

I'd like to hear how representative Boenher weighs in on this stock market BONER

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#5 Barack Obama

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Posted 26 September 2008 - 09:19 AM

Seems to me that speculators got too COCKY

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#6 dom

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Posted 26 September 2008 - 11:38 AM

things are also going tits up in britain!!

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#7 Swordfish

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Posted 26 September 2008 - 12:20 PM

Aye, that it is. I wonder whats going to happen?

#8 Artis Leon Ivey Jr

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Posted 26 September 2008 - 05:33 PM

heres a good dadchat

Please remember the following when you read this: America's banks, their surrogate Hedge Fund crony criminals and really STUPID, asleep-at-the-switch governmental jobs-worth bureaucrats (like Bush) caused all this; NOT indigent black families and beer-swizzeling rednecks getting NINJA subprime, option-ARMS loans!

Basically, doing the bailout comes down to a simple A or B decision by Congress:

Decision A: With NO immediate bailout announced and within about 2 weeks max, large numbers of businesses will crash nearly overnight (and not just the big financial firms, as we've seen with AIG). Most damaging?: there will be massive bank runs - especially with small local banks; they're toast. Hundreds of them. The result of this?: the FDIC WON'T be able to contain the damage and Congress will then have to appropriate massive bucks to shore-up the FDIC. This has never happened so there is no precedent for security of funds when the entire back-up system fails at once. We instantly move headlong into a real Depression as a result, same results as the 30's, different reasons. With all the pain of a hyperdeflation (not inflation) due to a severe housing crash, very high unemployment results - like 15-20% within WEEKS - and watch as amazing shifts in typical American lifestyles unfolds, with the turmoil all this implies. Those people around my age who have saved for retirement IN SECURITIES (like they were TOLD to do!) will be nearly wiped-out, virtually overnight. There will be huge social upheaval, this also immediate.

OR.....

Decision B: Congress announces a bailout (the exact details do matter a lot, but not as much as the avoidance of all the points of Decision A). The dollar's value against all the world's other major currencies will plunge and foreign debt holders (China, Japan and the Middle East) will start drawing their money out of American assets (treasuries mainly) - slowly, so they all don't get ass-fucked. To shore up the fleeing capital that supports the unsupportable American lifestyle/system, our government starts to print (more and massive) piles of cash (some for more direct "stimulus" checks to citizens to control social upheaval). This bailout will then start hyper-inflation and we enter a slow-burn descent into a second-rate bankrupt nation. This "slow roast" will happen over about a year. It's the frog who dies in a pot of water where the heat is slowly turned up. But all this will happen within one year, perhaps 18 months - not more.

I prefer the "Shock Therapy" of Decision A, as horrific as it sounds. It's time to meet the real terrorist enemy face-to-face. NO BAILOUT means an ice water bath wake-up call. America's brand of Capitalism appears to be in a death spiral- and in many ways, it is. Although a real Depression spanks every American in the 95% income category (the upper 5% won't feel a thing, but they never will/do), people WILL adapt. Big cars: gone. Big houses: empty, torn down. Stupid lifestyles: gone. Bad politics: we can get on the road to recovery with Obama, however, our military and their contractors will still attempt to find another war to fight - mark my words. There are historical precedents, America's proclivity to find and make war to save its economy is very real.

As I have already mentioned with Fareed Zakaria's observations, when BOTH the country's Political system AND it's economics are in trouble, the future doesn't look good. America is resilient, but we do NOT have many friends in the world now to help. All of Europe is headed into panic mode. England is going down the shitter fast as it always does, even Germany is especially hosed this time around. Japan, CHina and India are basically O.K. since they have massive reserves - of everything. And they'll pull as much of their cash as they can out of a soured investment. MOST of the Latin countries in our hemisphere are at relative arms-length to all this (which is one reason why Costa Rica is still the best "safe" bet for American's, despite the fact that it's economy is totally dependent on the U.S. But Americans like bananas and beaches, a lot). Canada is nothing more than an extension of America, like a fast-food franchise - but it's also pretty safe. The Silly country is cold and damp most of the year- sort of like a large version of the U.K. Personally, I'd rather be surviving in the sunshine, on a beach, in a country that has NO military or particular axe to grind on the world stage...

Our "Bailout" decision won't do anything to fix the most fundamental problem the country faces: housing deflation. This is what financial types are calling "deleveraging" (unraveling the consequences that someone who makes $50K/year can afford a $600K house). House prices will, regardless of either A or B scenario, fall at least another 40%. With decision A of course, the prices will fall precipitously, over just a few months. With Decision B, they fall more gradually, but they likely will go LOWER over a longer period of a prolonged squeeze. Housing prices NEED to correct to about half of what they were at the peak of 2006/7. A 50% haircut, in MOST of the country. Then, people might be able to really afford buying a house. If they still have a job, that is. Or - most Americans jump into a time machine and return to a time of Lords and peasants, Barons and serfs - a new Middle Ages.

Here's another reflection on this intractable bailout problem. This is certainly NOT a good time to OWN A HOUSE! Tens of millions of people have their PRINCIPAL ASSET declining in value while they make outrageous monthly payments for the privilege of owning an albatross! Money into a rathole now. This mainly in America, but duplicated in Britain, our Poodle. You ask: "where did all the value, the money paid for these houses go?" Good question. Answer: It's already been scooped-up, plundered by the wealthy 21st Century robber-barons who live all around me here in CT and NY. A lot of it went to the Hedge Fund assholes, the Wall Street cronies certainly. Piled high in the offshore banks, Euro/Swissand Cayman Island accounts. The barn door to all the goodies was opened, long ago.

Either scenario, to bail or not, is an absolute nightmare for the next Administration. Obama will be hamstrung from the start, thanks to a disasterous decade of neoconservative politics, policy and all the greedy Republican money-grubbers.

Empire fading, declining - or exploding. Take your pick. Some are saying that when two arms have been cut-off and blood is squirting out of arteries, it's no time to think about how to administer cancer therapies. That's a valid point. However, to fix this crisis, we'll need to amputate the legs too. America: a quadraplegic nation. I truly fear this is what WE GET for all the bad karma - hastened in the last decade. It's been piled-up too high.


brian chemicals

#9 Evangel

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Posted 26 September 2008 - 06:07 PM

I've kept up with this for the most part.  My roommate announced this morning that his credit card company went belly-up (WaMu), so it's really starting to hit home now. 

These big financial institutions have shown that they have been highly irresponsible lately, what with an average of $1 of real money to every $30 they loan, along with really stupid loans that never should have happened if they had even an ounce of responsibility.

American investors have been gloating for years at Europe (calling them "socialist" for their regulatory ways) and places like India (calling their growth "too slow" and "over-cautious").  Now they've got their feet in their mouths.  Even McCain was pushing deregulation right up until someone told him everything was going to shit.  The douchebag has no concept of the economic system (not that everyone else does, but he has some responsibility to have a remote idea).

I really hate the whole system.  These execs got all bloated on money that really wasn't there, and now we're all going to pay for it.  Except they'll be cashing out on some multi-million dollar severance checks and remain wealthy for life. 

Bailouts will be a must unless we want a 30's-era kind of depression, which might happen regardless.  I like the idea that the top guys in these bailed-out companies will be either thrown out or have a serious cap on their salaries.  Bailouts should be limited to the bare necessities, however.  Some companies need to just croak.  There needs to remain some sense of justice and punishment with companies that got out of hand. 

In any case, this still feels unreal to me.  This whole fiasco started pretty slow, with a few scares here and there, and people saying it's just short-term, but recent headlines are painting a pretty bleak picture.  It's like you always learned about the Great Depression and World Wars in school, but you never imagined you'd see one played out in your own lifetime.
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#10 Wash Cycle

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Posted 26 September 2008 - 06:21 PM

Some guy I know had his student grant/loan/whatever completely disappear when Lehman Brothers folded

he is fucked, he cant even finish out the quarter here heh

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#11 Marmot

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Posted 26 September 2008 - 06:31 PM

thanksgod i am going to take refuge in grad school

we marxists have known about this since day one
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#12 Bled

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Posted 26 September 2008 - 08:06 PM

As long as the Stafford isn't affected then I should be alright.  This is a pretty shitty situation though!  I've been reading in the local newspapers about how if the bailout is decided upon then the fed will assume control of 80% of AIG and the money generated from thereon will be distributed to the people in the form of tax credits and whatnot.  Sounds like a load of shit if you ask me, but who knows?  I suppose a lot of the long-term effects of this will be influenced by who we choose as the next president.

All I gotta worry about is surviving through two more semesters of college and I'm off to Canada for good.  As long as we're not eating the grapes of wrath before then, I don't really care!
For every moment of triumph, for every instance of beauty, many souls must be trampled.
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#13 Farren

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Posted 26 September 2008 - 09:04 PM

all I've got to say is I'm not learning Chinese

they can shoot me in the fucking head
DEUCE: MEETING THE URINE UP CLOSE AND PERSONAL AND REALIZING IT'S JUST LIKE ME AND MY PREJUDICES  THIS WHOLE TIME WERE COMPLETELY FFFFFFFFFFFFFFFFFFF PTTTTHTHTHH GOD IT'S EVERYWHERE<br />DEUCE: FUCK THIS TASTES LIKE PISS<br />PANTS: WHERE IT SHOULD TASTE LIKE COTTON CANDY OR PICKLES<br />DEUCE: OR AT LEAST LIKE URINE NOT PISS

#14 Boulvae

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Posted 26 September 2008 - 09:54 PM

I don't know, I mean Canada is next but it is relatively more safe then the U.S. because of how our economy runs. I am starting to think Russia ain't a bad idea anymore, or heack even China they may be a oppressive but I can still play my games there.
A tool is a tool regardless. I mean if you suck, you suck, and not even the most perfect tool could save you. And if your damn good then even with the worst tool ever conceived you could chug out some high quality shit.

#15 TFT

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Posted 26 September 2008 - 10:01 PM

Some guy I know had his student grant/loan/whatever completely disappear when Lehman Brothers folded

he is fucked, he cant even finish out the quarter here heh


man, that's really jacked. and yeah, idk, tax payers godda pay. nothing new.

#16 dada

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Posted 26 September 2008 - 10:41 PM

heres a good dadchat

Source of this?

I've yet to see how all this will pan out, but I sure am glad to be living in Europe right now.


#17 Bizzle

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Posted 26 September 2008 - 10:54 PM

Source of this?

I've yet to see how all this will pan out, but I sure am glad to be living in Europe right now.

But won't this collapse have some signifcant effect on other countries if it complete falls through??
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#18 jamie

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Posted 26 September 2008 - 11:04 PM

But won't this collapse have some signifcant effect on other countries if it complete falls through??


well as far as i understand it, yeah? i mean i'm very prepared to be incorrect here but i think it goes that these empty bubbles of finance are spread all over the world through money being loaned out of america and when they pop, as they already have in many places, everyone is left in the shit. i don't think the damage is as extensive in other parts of the world, the less trade with america the better basically.

#19 Bisse

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Posted 26 September 2008 - 11:06 PM

this is a good day to not be a yank

#20 Artis Leon Ivey Jr

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Posted 26 September 2008 - 11:09 PM

yah the crashing of one of the world's largest economies doesn't affect the rest of the first world at all.
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