The Bailout Has Failed

Conservative Republicans and liberal Democrats in the House of Representatives have just killed the $700 billion bailout. This is not surprising, since representatives have said that they’ve received two types of calls from their constituents: “no” and “hell no.” On one hand, I’m happy that our leaders are listening to the American people rather than their party superiors or the rich and powerful. Ultimately, it’s the people who vote. On the other hand, this problem needs to be addressed somehow.

About jamesbradfordpate

My name is James Pate. This blog is about my journey. I read books. I watch movies and TV shows. I go to church. I try to find meaning. And, when I can’t do that, I just talk about stuff that I find interesting. I have degrees in fields of religious studies. I have an M.Phil. in the History of Biblical Interpretation from Hebrew Union College in Cincinnati, Ohio. I also have an M.A. in Hebrew Bible from Jewish Theological Seminary, an M.Div. from Harvard Divinity School, and a B.A. from DePauw University.
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11 Responses to The Bailout Has Failed

  1. xHWA says:

    I can’t decide which degree of “no” I prefer, but it is “no” none the less.

    My Representative voted no. Got quite the lambasting for it, too. I am quite happy with my Rep right now. I sense a reelection in their future. Their reasoning – the problem isn’t liquidity but a credit crunch; adding liquidity won’t solve it.
    There is a super-abundance of liquidity right now. The dollar is near record low value. So the Fed wants MORE? Simply tell the President to fix the regulations and loosen the binds on credit and the whole thing will flow like a plunged toilet. Then we can do something for the housing market and the taxpayers who need a break.

    Check these out, btw:

    http://www.youtube.com/watch?v=ticytEUvVhQ

    http://www.youtube.com/watch?v=lsC2k9opOP0

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  2. James Pate says:

    Hi XHWA,

    Thanks for the videos. I agree with the Ron Paul one. I get tired of people blaming the free market for our problems, as if America has a truly free market. In most cases, the government is messing things up somehow with its interference.

    As far as credit goes, I wonder if that’s a potential problem too. Aren’t a lot of people in credit card debt? Even that second video said that credit is extended too easily. What will happen if they default?

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  3. xHWA says:

    Good point, James. Definitely there is a, once again government created, problem with easy credit. Like you said, America does not have a free market. If we did, President Clinton would not have ratified the United Nations fair housing bill and banks would never have been forced to extend credit to people who would never have otherwise gotten credit. Talk about law of unintended consequences!

    I’m all about helping poor people. There are so many things we could all be doing. But socializing housing and credit markets leads to what we have today. Then people run around saying “woe is me!” Well, this is what socialism does in a system that is completely geared against it.

    If those people default, the banks will go bankrupt. That’s the chance you take when you knowingly play the high-risk mortgage game, though. But businesses going bankrupt is sometimes a very good thing. The shareholders and many employees will lose their shorts. The liquidity will still be there, the savings will still be there, the company will still be there – only under new management. And all that bad debt will be gone. Then the system will lift itself back up and will be all the stronger for it.
    The alternative is a tax burden much much larger than $700Billion, the destruction of the dollar, the government will own all those properties and stock in large companies, and who can know what other consequences there will be?

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  4. James Pate says:

    Is that your understanding of the Ron Paul approach: people will buy the assets and the economy will get better? I think I also read that idea in the New American.

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  5. xHWA says:

    I just believe that is the way corporate bankruptcies work. I’m not claiming to be an economist myself.
    Companies go bankrupt all the time. Most of the airlines, Owens Corning, etc. Big name places! And most are still around. Some get bought up, some restructure, some go under and are replaced by other companies because there is a void to be filled.
    I personally think the difference here is that the real fat-cats don’t want to personally lose out on the gamble they full well knew they were taking, so they call their buddies in congress to use our money to bail them out. That, unfortunately, is also ‘how it works’. Well, I am disinclined to acquiesce to their request.

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  6. xHWA says:

    If you really want to see something insightful, watch this:

    http://www.youtube.com/watch?v=_MGT_cSi7Rs

    I’m still unsure as to how shocked I should be. Perhaps I’m too shocked to be properly shocked. It’s shocking.

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  7. xHWA says:

    Here’s another thing to chew on:

    http://www.davidforalaska.com/Money_Changers.htm

    It pretty much sums up what I believe.

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  8. James Pate says:

    I’m listening to the You-Tube right now. Yeah, it would be funny if it weren’t a serious issue.

    I have a few questions for you. I’ve not yet read the link:

    1. If the government doesn’t bail out Wall Street and just lets the companies get bought out, how long do you think it would take for the economy to bounce back?

    2. How would that work for Fannie and Freddie, which are government institutions (in part–I don’t entirely understand what they are, to be honest).

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  9. xHWA says:

    I think some form of government action is mandatory or there will be conditions like the Great Depression. Only, I think Ron Paul is right, and Marcy Kaptur (D) OH, that throwing money at the issue is the WRONG thing to do. The problem is credit, which can easily be fixed by a slight tweak by the SEC and friends, and one of confidence which will be fixed once the first tweak is in place.

    We are already in a recession. The problem could go either way to getting better or worse. Even so, for all the hulabaloo about how bad this ‘crisis’ is, it’s not as bad as times in the late 80’s.

    I think that if the government does the right thing (heh… fat chance) then the credit problem will be addressed and the housing market will be assisted, not Wall Street fat cats, and the clog would break free in short order, there will only be a slight deepening of the recession due to some bankruptcies of large investment firms and banks, it will all work itself out naturally, and in a couple years we will see the results of the up-turn. Not only that, but the health inherent in the new conditions will bring a new boom.
    I think that if (I mean when) the bailout goes through, the band aid will be temporary and more money will be thrown at the issue (and certainly IS, but you don’t hear about that). The “fix” isn’t the right fix, and the problem remains, so it has to come back upon us. We will all feel good about ourselves for a short while, the Christmas sales will be better than the gloom expected, but the problem will not really go away. We will slowly bleed. And God save our children and grandchildren who will bear the brunt of this burden when it comes back on them even harder than it is now.

    Fannie Mae and Freddie Mac are government created private businesses that use private and tax-payer funds to buy, sell, and hold mortgages. The FED and Paulson have already bailed them out, and will probably funnel some more money in so those bad mortgages can be taken off the books – or some lame excuse like that.

    Here is a good article on that::

    http://hnn.us/articles/1849.html

    They are a sham and a cash cow for the government insiders. The Federal Government has no business being in the mortgage business. The very idea that the government could own your house and property is preposterous and completely un-American. How on God’s earth did we get so dull as to let our limited Constitutional republic (NOT DEMOCRACY!!!!!) get to this point?? They are, in my eyes, a symbol of the government’s reach for further power and control over our lives. As benign as they appear, I don’t trust the government anymore.

    I am borderline conspiracy theorist these days that with all Bush and friends are doing to bring more power to the federal government, and especially towards creation of the North American Union, all of this ‘crisis’ is probably a cooked up sham and someone is trying to force the dollar tank along with the nation so our saviors can rise up and propose the new order that will solve this mess once and for all. But take that with a grain of salt.

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  10. James Pate says:

    Thanks for the article.

    So are Fannie and Freddie taxpayer-funded in part? One of Sarah Palin’s “gaffes” is that she said they were.

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  11. xHWA says:

    Oh, they most certainly are! And not just in bailout times, but fairly regularly.

    Another series of interesting articles has surfaced today. Try some of these on:

    http://www.courant.com/news/politics/hc-dodd0929.artsep29,0,3321771.story

    http://weblogs.sun-sentinel.com/news/politics/broward/blog/2008/09/ron_klein_gets_lots_of_cash_fr_1.html

    These are the kinds of things that burn my bottom. It’s not a bailout of main street USA, it’s a bailout of the buddies and generous contributors. That’s the way political systems work, unfortunately, but I hate that with the raging fire of 1,000 suns. Now my grandkids both have no freedoms left, and they have to pay for these punk politicians and their corrupt greed.

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