This is the first thing I thought when I heard this news.
There is no assistance to real people struggling to get by as their yearly raises don't keep pace with the increase in their health insurance premiums and more and more of their discretionary income is eaten up by fuel prices.
All the while, the minute the same large, mismanaged bank that set us up for failure finally gets its cumupance, the Fed is ready to offer low interest loans, no interest loans, or just plain cash.
You are right. They are buoying the speculation based "investment" economy while letting the real economy, from which all of our products, services and innovation stem and where real wealth is produced, drown.
Then these brilliant economist and analysts are surprised to see the resulting inflation and sit around debating whether we are in a recession.
Hey, assholes! See all the trees? We're in the fucking forest already!
I think you're forgetting that we're an empire now. We create our own reality.
Posted by lambert strether at March 15, 2008 08:23 AMBailout=debasement of currency. Debasement of currency=inflation. Inflation is a regressive tax that increases its burden as it moves across class and across borders to countries where people eat one meal a day or less. Bailing out banks or investment houses is to move wealth or purchasing power from the ultra poor, the poor, the middle class on up to the rich and the ultra rich who have the most at stake with these investment houses and brokers. Unfortunately, the democrats are as guilty of this shameless act as the repugs since they have been hammering Bernanke to cut rates even more. Talk of bailing out 'homeowners' is almost as egregious. The majority of houses built in the US seem from my travels around the country to be not less than 3500 square feet in size. Bailing these folks out via debasement of the currency is to ask those who are eating one meal a day as well as those who acted prudently and bought much smaller houses as well as those who are renting to pitch in to the troubles of such people. The dirty secret that makes the world go round is manipulation of the money supply and the dominance of the US dollar in world markets. It's much easier and more convenient to talk about race: hence a half-term senator, forty-six years old with no track record and a poor ability to give a repetitive empty speech about 'change' without a teleprompter, is hailed as the next great thing by those who have money. Why? Not because he is black, not because he represents real change but because he attended private schools, and two Ivy League colleges and he speaks like one of them. This is all subconscious assurance that he will never mess with the money supply; he is indeed a hero. The rich will keep getting richer and the desperate (mostly found in other countries) will continue to struggle to survive. Meanwhile the wealthy and the pseudo-liberal wannabe rich will continue to pat themselves on the back for voting for this great hero.
Posted by Groucho Marx at March 15, 2008 08:35 AMHow does the Bear Stearns thing affect venture capitalist Alan Patricof?
Posted by Bob In Pacifica at March 15, 2008 09:15 AMYeah, the rich getting richer, State Senator Barack Obama's wife Michele getting $121,900; in 2004 and as US Senator's wife, $312,000. Yeah folks, drive those hospital stays up while getting those one million dollar earmarks for hospital growth. $190,000 increase in just one year! I wonder what the janitors received?
Posted by peter at March 15, 2008 09:53 AMDay 2 of Econ 101:
Y(k,l) = k^a * l^b.
Our current situation:
dl(China)/dY(k,l) >> dl(U.S.)/dY(k,l)
and
dk(China)/dY(k,l)
Thus labor shifts to the lower unit labor cost Chinese economy and the investment of capital becomes the driving force between the U.S. economy and individuals from the two countries trade their excesses with one another.
Posted by Jay at March 15, 2008 12:09 PMAnother cut comment....
dk(China)/dY(k,l) is significantly less than dk(U.S.)/dY(k,l)
Posted by Jay at March 15, 2008 12:11 PMWhich is why Ralph Nader is polling at 5-6% in Zogby's 2008 election poll. There are a few progressives willing to stand up and vote for real change, not just the status quo "crying wolf" change from Obama or Hillary.
Nader is polling well among Progressives and Libertarians.
Posted by R. Ko at March 15, 2008 12:28 PMLook, the reason why finace gets away with this stuff is because there is a nugget of truth to the statement that if we let finance fail everyone suffers. Consider bank failures during the Depression and how severely that punished people who had done nothing wrong.
The solution is not to let it all burn. The solution is to re-regulate the financial sector. Big time. If what you want is revenge and to see the financial sector punished for gaming the system so that they can legally gamble with with other people's money and then get bailed out afterwards - and I don't blame you - consider how much they'll hate that.
Posted by FreakyBeaky at March 15, 2008 01:23 PMguess jay is whacking off while reading an economics book
Posted by gay veteran at March 15, 2008 07:53 PMAnd how much do you want to bet that Bear Stearns executives will pocket a hefty part of this $200 Billion bail-out as "bonuses"??
Posted by The Oracle at March 15, 2008 10:20 PMR. Ko, I'm willing to look at Nader if Hillary gets the nod.
Anyway, about that "coercive and punitive bankruptcy law," which side of that law did Hillary vote on, again?
Oh, yeah, Hillary voted FOR that bankruptcy law!
All you liberal Hillary supporters, do you really believe Hillary is one of you? She's not.
Posted by Brian Bell at March 16, 2008 09:39 AMSpot on Paradox
Why is the Fed bailing out the people that wrote the bad mortgage loans but not the people that bought homes using them? (Just to be clear: I don't believe either should be bailed out) Just another example of how earned income (which is the way that the majority of mortgages are paid for) is treated differently from unearned income (which I suspect is more often than not inherited.) What a sorry state of affairs. It's too bad that we all are going to pay for the reckless speculation that banks and their backers participated in.
And oh yeah, how many children could $30 billion (surely only the beginning of the bailouts to come) have insured under SCHIP? What a cockup!
Posted by NixterJ at March 17, 2008 01:15 PM