The impending economic catastrophe: does anyone care?

I'm incredulous.

The United States is in the middle of the biggest economic crisis since the Great Depression, if not in our entire history.

On September 7, 2008, without a vote by the people or even by Congress, the federal government seized control of—that is, nationalized—Fannie Mae and Freddie Mac. On September 17, the federal government nationalized the insurance giant AIG.

The American public didn't even blink.

If we, the people, allow this to stand, for all practical purposes, September 7, 2008 will be remembered as the day that the United States died.

Stalin is laughing in his grave.

And the damnable thing is, it's all for nought. The federal government cannot stave off the inevitable. Like a building built on quicksand, our entire economic system is unsound. The end of fractional reserve banking and fiat currency is coming. The only real questions left are 1) when will it happen, and 2) how calamitous will it be.

But here's my question: does anyone care?

The only thread I can find anywhere that even touches on our economic catastrophe is the "how is the economy affecting you personally" thread in the "Everything Else" board. The Politics board has discussions about theme songs and bumper stickers.

I don't understand. I really don't.

Do people not understand what is happening?

Do people think that if we throw a few greedy corporate executives in jail and pass a few more regulations, that everything will go back to normal?

Do people think that whoever is elected as President in November (McCain or Obama, take your pick) can wave a magic wand and make everything better?

Are people just so overwhelmed by the sheer magnitude of what's happening that they're refusing to admit that anything's truly wrong?

What are your thoughts?

"Posterity! You will never know, how much it cost the present Generation, to preserve your Freedom! I hope you will make a good Use of it. If you do not, I shall repent in Heaven, that I ever took half the Pains to preserve it." - John Adams, April 26 1777

I think this is an insighttul post and I do care. It is a shame that unbridled greed by big business has resulted in tax payers having to bail out guys who made millions and won't even spend a 10th of what they made to bail out these companies.

Yet when a politican talks about social programs to help the poor and disenfranchised there is a public out cry of high taxes and how this country is heading towards socialism. But when rich people cost the government billions of dollars no body has anything to say. I see it". It's hypocrisy and a whole lot more going on in the minds of people in th worse way. Money and power still talks, it is still seductive. Unbridled greed, wealth and power is still lauded in this country and wealthy people still get a free pass.

However as usual poor people who can't afford anything are still looked down upon.

Notice that there's no plan other than to add liquidity to the credit markets offered by Paulson and Berneke. You're correct that this bailout plan is nothing more than a delay tactic. The hope is that property values will start rising because the greater availability of loan money will get people to start buying again...but to me this was the impetus that lead us down this path in the first place.

Isn't it curious that none of this money was available to restructure individual mortgages when the crisis first broke?

This proposal will pass, however, because no one wants their name tied to the next great depression.

Jeffrey Sachs as on Morning Joe this morning, and mentioned that Wall Street execs took more in bonuses than all the nations of the world gave in foreign aid to Africa. Interesting...

Of course people care...we all need to care because we all are or will be affected by this crisis. And crisis is exactly what it is.

People are upset about the bailouts and rightfully so, but unfortunately it is a necessary evil. If we do not act and do nothing then we for sure are in dire trouble. The bailouts need to be done to try to stem the tide so our economy has a chance to ride it out. Trust me, I think we pay way too much in taxes already so I really do not want to be footing this, as well. Unfortunately, we have no other choice.

There are two things we need to think about. The first is how do we get out of the mess we are in now and the second is how do we make sure we are never in this mess again.

The first mess is the bailout. Yes, it sucks and yes, it is completely scary that the government is stepping in and bailing out these entities. The AIG loan is at 11% interest and only over a two year term so there is a big chance that the government will actually make money. AIG is one of the largest insurance companies in the nation so they have assets that can be sold to other insurance companies that did not do this dumb move of getting into sub-prime mortgages. Traditionally, insurance companies have been the most conservative investors out there and many insurance companies are not at risk because they still follow that conservative practice. As for Fannie and Freddie, I do not see how we can get out of that mess. People who should never have been given a loan in the first place were given a loan. They could not pay before the economy tanked and they will not be able to pay now. I do not see the government ever getting their money back which means we have to pay for it with higher taxes.

The second is how do we make sure we are never in this mess to begin with - People who should never have been given a loan were given a loan. We need to make sure this does not happen again. People want to be compassionate and give poorer people the chance to own a home. Well, waiving the 20% down requirement and not requiring them to have enough income to cover their mortgage, is not good policy. Obviously. But unfortunately, that is exactly why we are where we are at today. Sounds good - help people get in a home. Well, reality is, some people are never going to be able to afford a mortgage and they should not be given a loan just because we want to feel good or be compassionate.

You say, that neither candidate can fix this but that is not necessarily true. You might mean because we are in such a mess now that it is going to take a miracle to pull us out of it and that is true. But there is one candidate that will do everything to make sure we are not in this mess again and that is McCain. It makes me shudder to think what will happen if Obama gets elected.

It was the Bush Administration that proposed a bill back in September 2003 to create an agency under the Treasury Dept to oversee Freddie and Fanny. In September 2003, we knew there was a problem with Fannie and Freddie. It was the democratic Congress that shot it down. And good ole Barney Frank, ranking democrat on the Financial Services Committee, went as far as to say, "These two entities--Fannie Mae and Freddie Mac--are not facing any kind of financial crisis." (source, NY Times September 11, 2003).

Also after Greenspan spoke in 2005 about Freddie and Fannie, there was a Fannie and Freddie reform bill that was passed by the Senate Banking committee (which was co-sponsored by none other than Senator McCain). If this bill was passed, we would not be where we are today. But unfortunately, this bill did not become law because the democrats opposed it down the party-line.

So between McCain and Obama, it is a no-brainer of who is the better man to see us through this crisis and to make sure we are not here again. And if people think otherwise, I really do not know what to say. It is hard to reply when people refuse to see the reality of the situation.

IMHO there's no way that the owners (stockholders) as well as CEO's, CFO's & COO's of these companies (AIG, Shearson Lehman, etc.) should be allowed to benefit from any bailout. Re-structure, re-finance or whatever but it should be at THEIR expense.

I heard something really interesting today and wanted to share it in case anyone is interested. Dennis Prager has a talk radio show and he had an economist on today just to understand what the bailout is. This part of the show was not to discuss who was at fault; it was just to clarify what the bailout means.

I found it very informative. There were a lot of things that I did not know and also a lot of things that I had misunderstood.

Dennis had an economist on to explain the bailout. One of the things that I found very interesting is that the $700 billion bailout does not include the $85 billion loan to AIG or the $200 billion guaranteed to Fannie and Freddie. (Yikes...we are almost at one trillion dollars!!)

Well anyhoo, you can listen to that part of the show under Dennis Prager's Podcast. It is called "The Bailout" and it is from Thursday, September 25th. If you google Dennis Prager's name, you should get to a the townhall page for Dennis. Under that page you can get to Dennis' Podcast.

Dennis Prager is a conservative talk radio host. This man is extremely intelligent, respectful and fair. Even though he is conservative, he treats people with opposing views fairly. His motto is "Clarity over agreement". You may not be a conservative but I think you will find his show very interesting and you might not agree with him but you can not help yourself but respect this man...(plus, I have a huge crush on him!). And even if you do not want to listen to his show, please at least listen to this podcast. It was very informative and helpful in understanding what this "bailout" means.

I hope this is helpful!

I care.

As long as financial markets RULE the global economy, the tail will continue to 'wag the dog'.

You ain't seen nothing yet.

China hasn't even begun to 'invest' yet ...

What impending economic disaster are you speaking of? Let's just all go back to putting our heads in the sand while I go out and buy some gold and euros. Nothing to see here.

All kidding aside though if there's one thing history has taught us, it is that we don't learn from history. Humanity is still bound to the boom and bust cycle of fear and greed. I would posit a question a bit more important than whether anyone cares about the impending disaster: how does one survive an implosion?

When the bailout goes through, the dollar will become devalued to say the least. Oh well, at least exports will rise...

Uh, well ... this bulletin board has a section for political discussion, but it's not really geared towards that topic/interest. Not sure what you think would be accomplished by a everyone getting up in arms about the matter on eHA ...

<--------*Sings* "It is the end of the world as we know it, and I feel fine" by R.E.M..

The day that I started selling all of my American stock was a little over two years ago when this guy I knew in America who was an ex-con and worked at a gas station was able to get a mortgage. Yes, I am still dancing with glee.

I just pity the American tax payer who will have to pay the burden for all of this.

Strangely this all reminds me about the movies Network or Zeitgeist.

When the American dollar reaches 'junk' status, as it is heading, the global financial markets will go into a tail spin. World markets are pegged to the American dollar. So, as America goes, so too goes the rest of the world, short term. It will not be 'pretty'.

My own reading on this is that the 'financial' community has been floating on 'air' for near two decades now. A major market 'correction' IS in order. And yes, it will 'hurt', but is necessary if a complete 'death spiral' is to be averted.

The 'bail-outs' are only band-aid solutions. They offer a temporary reprieve with no assurance that they will actually 'remedy' anything. [What sane person believes these are GOOD investments?] What is necessary is a complete over haul of the manner in which financial institutions conduct their affairs GLOBALLY. Also, I believe that 'over-extended' businesses MUST be 'allowed' to fail. They are not healthy, they have not exercised fiscal prudence. Their continued propped up 'survival' only weakens an already weak economic environment. It is not a SOLUTION.

Transparency and accountability are required. But, will that happen anytime soon? Unlikely. Greed and fear do currently dominate 'market' activity. Thing is this is a 'cultural' bias, at core, not an economic one.

Watch China. China is the key player in this unfolding messy saga. America owes them so much money, and likewise, they have so much money to INVEST outside of their own boundaries. The 'balance of power' is shifting in their favour ... glacial, but it IS shifting.

This century will belong to China.

Not just China, but Russia, Brazil, India, Vietnam, Indonesia, and Cambodia where the economies and the population are young and eager. Possibly certain countries in Africa as well.

China is already experiencing a large drop in its population due to the one child policy. It also needs to import its energy sources since their coal supplies are getting smaller by the day. China might have already peaked.

Yes, I do care.

Sorry, not a snowball in he l l ... NUMBERS, sheer NUMBERS.

(From about.com/Population Growth in China ): - "With just over 1.3 billion people (1,330,044,605 as of mid-2008), China is the world's largest and most populous country. As the world's population is approximately 6.7 billion, China represents a full 20% of the world's population so one in every five people on the planet is a resident of China.

China's population growth has been somewhat slowed by the one child policy in effect since 1979. As recently as 1950, China's population was a mere 563 million. The population grew dramatically through the following decades to one billion in the early 1980s.

China's total fertility rate is 1.7, which means that, on average, each woman gives birth to 1.7 children throughout her life. The necessary total fertility rate for a stable population is 2.1; nonetheless, China's population is expected to grow over the next few decades. This can be attributed to immigration and a decrease in infant mortality and a decrease in death rate as national health improves.

By the late 2010s, China's population is expected to reach 1.4 billion. Around 2030, China's population is anticipated to peak and then slowly start dropping.

In the next few decades, India, the world's second most populous country is expected to surpass China in population. By 2040, India's population is expected to be 1.52 billion; that same year, China's will be 1.45 billion and India will become the world's most populous country. As of 2005, India has a total fertility rate of 2.8, well above replacement value, so it is growing much more quickly than China."

Combine those statistics with a ever-growing industrial manufacturing POWERHOUSE ... (head over heels above India btw, economically AND politically) and China leads and will continue to LEAD for much of this century ... Also, CONSIDER the financial 'reserves' of China. America is massively IN DEBT to China, unlike say, to Brazil, or India ... .

The Chinese Government is doing a slow 'Victorian style' waltz right NOW, but their own version of 'free-style' choreography is just a short heart-beat away ... AND, don't forget Abu Dhabi, and and other African alliances with China. The NEW alliances formed within the Gulf Region over the next decade will also profoundly 're-align' the current global 'picture' ...

Russia & America can send 'naval ships' to the coast of Somalia to ward off 'pirates', but China has it's EYE on the entire resource rich continent ... They've got both the money and the PATIENCE to 'wait out' the pending North American financial free fall from 'international grace'. Meanwhile they continue to slowly INVEST in places like Darfur, quietly, insidiously.

Money is money. And China has LOTS of it, plus they have the willing LABOUR who will continue to produce it, internally. Their position, at this time, is unassailable, in my opinion.

Frankly, I wish someone could PROVE me wrong ...

moderated twice in a row .... hmmmm, ok will let this 'sit' for a bit ...

You can get in a total frenzy over the whole mess. Maybe a better approach is to look at what you can do now. How does my life need to change. It could be said that as soon as the gold standard was abandoned we started living in a bubble - at best we are living on trust in a government which is proving rather untrustworthy. Fear and anger will not be productive - life is fragile. Education on all levels is key.

It was in fact John McCain and the GOP that are largely to blaim for getting where we are today with this latest financial mess. McCain's been the Great Deregulator all throughout his career and now he's waffling trying to paint himself as some regulation savior. It's utter baloney. Here's a sampling of Mr. McCain has done for us:

First, he supported deregulation of the Savings and Loan industry. All the while accepting swanky gifts and trips on private jets from Charles Keating who would benefit directly from the legislation. That legislation is what allowed rampant theft of customer savings to occur because of minimal or non-existent oversight provisions. The Savings and Loan industry then crashed and we the taxpayers coughed up $30 Billion for that bailout. McCain was indicted for corruption and Keating went to prison. McCain was one of the infamous "Keating 5" lest anyone forget.

McCain followed that mess with deregulation of the energy industry. Legislation and 'bad policies' followed that created chaos in the energy markets, the Enron scandal, and cost rate payers across the country $20 billion in manipulated energy costs. This wasn't a case of enforcing policies already in place because deregulation once again created the 'bad policies' and minimal oversight which allowed this to happen. Within a year all competition for gas and oil was gone and prices began rising. Further deregulation of the energy commodities market then allowed the giant energy conglomerates to own the gas stations, the oil rigs, the refineries, and thanks to John McCain, they now could create their own hedge funds to manipulate supply, demand and the financial markets. Exxon Mobile made out big time and in '08 raked in more profits than any company in the history of the world, and payed their CEO $500 million in bonuses, while spending less that 2 million to develop new sources of oil from the more than 10 million acres of undeveloped US oil leases Exxon holds.

McCain then supported deregulation of the Mortgage industry (Phil Graham was the primary architect of that legislation) which led to the 'bad policies' which then allowed rampant lender abuse and this year's mortgage crisis. That bailout cost us taxpayers $150 Billion.

Now we're getting hit for another 7 or 8 hundred billion clams because of 'bad policies' that were enabled by....say it with me....deregulation that JOHN MCCAIN has supported all throughout his career. The latest mess is largely due to the passage of the 1999 Gramm-Leach-Bliley Act. This piece of legislation repealed regulatory law in place since 1932 that kept commercial banks and investment banks seperate.

That particular legislation, Glass Steagal Act, was put in place because, at the time, "improper banking activity", or what was considered overzealous commercial bank involvement in stock market investment, was deemed the main culprit of the financial crash leading to the Great Depression. According to that reasoning, commercial banks took on too much risk with depositors' money. Commercial banks were accused of being too speculative in the pre-Depression era, not only because they were investing their assets but also because they were buying new issues for resale to the public. Thus, banks became greedy, taking on huge risks in the hope of even bigger rewards. Banking itself became sloppy and objectives became blurred. Unsound loans were issued to companies in which the bank had invested, and clients would be encouraged to invest in those same stocks. Sounds familiar, doesn't it?

The Gramm-Leach-Bliley Act repealed the Glass Steagal Act that had separated commercial and investment banks. Commercial banks, where people deposit their paychecks and do personal banking, have regulation. Investment banks don’t. The Act passed 54 - 44 pretty much along party lines (Biden voted against it, McCain for it) and it was, ironically, signed into law by Bill Clinton. With Glass-Steagall repealed, the theory was that competition could now happen in financial services, regulation was gone, free markets would reign. Mergers happened that couldn’t before. A broader range of institutions could offer a broader range of products, which grew to include obscure, unregulated financial products with no collateral to support them (like sub-prime mortgages). Regulated banks couldn’t take those kinds of risks. Unregulated companies could. These were things like "Structured Investment Vehicle's" (SIV's) that were doing all kinds of "creative" things with our money.

Had it not been for the passage of that 1999 legislation, we probably wouldn't be in the mess we're in now. So if you're really looking for the "no brainer" here, it's that John McCain and the GOP have been creating vehicles for corporate criminals to steal our money for the past 20+ years. This information is freely available to anyone looking for it and yet it's the of analysis you won't get on Right Wing Radio. Even the left isn't doing this kind of investigation in any kind of meaningful way. It's apparently easier to be the blinkered partisan and mindlessly repeat the talking points of one's favored candidate than it is to do some honest homework.