US Congress rejects bail-out

I am not surprised by this, why should the every day American take one on the chin for the error of these Banks.

I say arrest those for this mess and lock them up and take there wealth away from them.


US Congress rejects bail-out - Yahoo! News UK

As a side note to events here, thanks Gordon Brown for your Bradford & Bingley cop out which we the tax payers will now foot the bill.

 

Actually, I am surprised. Our 'representatives' have been representing corporations for so long, that I thought they had their hearing aids off so they could not hear the cries of their people.

I shot off an email to good ole 'W' informing him that he should now get the hint that we have had enough. We'll see how long I have before the Secret Service comes knocking at my door...or is it knocking down my door.

 

OK, when do I start.

Its the old problem money is power and power is looking the other way until the dung hits the fan.

 

I agree. This whole mess started with a couple of Democratic presidents who thought they could make points by promoting more home ownership among the poor classes and pressed Congress to repeal certain laws enforcing sound mortgage lending practices. Congress magnanimously complied and opened the floodgates on shaky loans to people who couldn't really afford them.

Now, the media in it's zeal to punish "big business" has convinced the public the bailout plan would have been paid for by the taxpayer, which may have been true. But it's virtually certain that we'll all pay the price now that a world-class recession is probably unavoidable.

 

Bloody hell the Dow was down 710 at one point, now stands at 673.

 

Certainly it seems that the will of the American people is opposed to this extraordinary bail-out.

It seems so tragic that this amount of money was to be spent on ailing banks when so many people could be helped. As someone said recently: Banker rhymes with ... ... ...

In Australia, the Govt. has stepped in and provided $4 billion. At the same time, an Opposition move to have the pathetic old aged pension increased by a puny $30 was canned by them.

The flip side to this is that the financial sector of many Western countries is now very fragile. The ramifications are going to be massive and affect everyone. 9/11 will be seen as a mild hiccup compared to this.

 

I think the recent origins of the financial crisis date back to 1999 when internet spending was at its peak in the face of a possible Y2K disaster. The disaster never materialized but the threat did result in unprecedented investment in the internet sector. In order to fully capitalize on the Internet Bubble, investment banks disregarded tried and true underwriting procedures and raised $77 billion in IPOs from mid-1999 to mid-2000. Investment banks enjoyed a 6% commission on that amount as their underwriting fee and they very often enjoyed tremendous capital gains from their own investments in the companies that they brough public. By the time the Internet Bubble had burst, Main Street America had lost about $1 trillion.

In response to the great losses experienced when the Internet Bubble burst, the Fed slashed interest rates, resulting in very aggressive mortgage products which were easy to obtain. Housing prices skyrocketed, as we in the USA all witnessed from about 2002 through 2006. Unfortunately, the rampant appreciation was not realistic because it was not supported by mortgages which could be paid off, despite the low interest rates. Since July 2006, housing values have dropped by 20% and I've read that they may drop yet another 20%, resulting in an overall loss of $4 trillion in value.

With a potential aggregate loss of $5 trillion (at least on paper) leaving the US economy as a result of the Internet Bubble and Housing Bubble implosions, is it any wonder that we have reached the financial crisis that we have reached? That said, I actually feel that the Congress needs to bailout the system or we are looking at a very scary day in which the US has lost a lot of its economic relevance -- and since every other country is in some way dependent on the US economy, that is bad for us all.

 

Nobody knows what will happen. It's a big gamble. Either the US taxpayer pays and looses big money, or does not bail out and possibly has to pay more (or not) ... What scares me is the domino effect that may affect the whole world.

 

Slip is right on target. Not saying it's any particular party or individual that should be looked at, but a particular pair+2 of groups. namely PAC's (political Action Committees), Banking & Insurance organizations, and of course our beloved & bulletproof, Golden Parachuted Congress.
Here's one of them from a "Totally" Democratic Newspaper
When a Democratic takeover of Congress put Christopher Dodd in charge of the powerful Senate Banking Committee, Connecticut's senior senator eagerly met with reporters, outlining his generally pro-industry positions, but pledged to put consumers --- and the long term health of the economy --- first.
"At the end of my tenure on this committee," Dodd said in early 2007, "I want it to be said that the safety and soundness of our financial institutions was not weakened on my watch."
A year and a half later; Dodd acknowledges that the nation's finances are in an "economic maelstrom." And while Washington engages in an urgent search for after-the-fact fixes, there is also plenty of finger-pointing, and there are enduring questions about whether campaign cash --- millions and millions in campaign cash --- blinded Dodd and other overseers to the excesses of industry.
Financial sector firms --- mortgage firms, insurance companies, accountants, brokerage houses, hedge funds --- are among the most generous political donors in America. Lavishing Political action committees and employees of financial firms make up 18 of the top 20 givers to Dodd the past six years, including four firms - AIG Insurance, Bear Stearns, Merrill Lynch and Lehman Brothers - that have been bailed out, bought out or gone broke this year.
Conflict of interest ?

Company -----Total

Citigroup ... $314,694
SAC Capital Partners ... $282,000
United Technologies ... $263,400
Royal Bank of Scotland ... $229,950
American Intern'l Group ... $224,678
Bear Stearns ... $205,600
St. Paul Travelers Cos. ... $205,400
Goldman Sachs ... $175,600
Morgan Stanley ... $155,000
Credit Sulsse Group ... $154,550
Merrill Lynch ... $135,950
Lehman Brothers ... $133,800
JPMorgan Chase & Co. ... $129,650
KPMG LLP ... $113,100
Hartford Financial Services ... $110,450
General Electric ... $108,250
Deloite Touche Tohmatsu ... $108,000
UBS AG ... $101,200
The Hartford ... $94,350
Bank of America ... $91,300

This feller is a staunch Democrat, lifelong friend of Joe Biden, and a "Rabid" supporter of Obama.

Change?

 

Very bad day on the Dow.

Down 777.68

 

Worst day since Black Monday. Congress is not going to vote on a new package until Thursday so expect more bad news over the next few days.

 

Indeed......

This week is going to be very interesting. I'm so glad I sold all my stock a few years ago when the FTSE100 was in the 6000 mark, since then the FTSE100 has gone no where but down and come 9am tomorrow UK time we're be down again. Of course I agree your down is a heck of a lot more of a loss.

 

I just heard.....

Announced on US news that this is the biggest fall on the DOW ever!

 

Yep. This will cause tremendous hardship to retirees in the US. My retirement account appears to have lost about 9% today but I have time for it to rebound. I have a friend who just called and told me that over the past year he has lost all of the money that he received when he sold his company a few years ago. Now he has to start over.

 

I have to agree with Skunkworks on the role of political Action Committees and lobbyists buying off politicians in both parties. Public execution sounds good to me !
I for one am not in favor of a bail out. They always talk about free enterprise on one side of their mouth and want tax breaks on the other side of their mouths. Let the bankers take their lumps and those who play the stock markets.

I saw a small blurb on TV of congress also giving money to help save Detroit auto makers but it was smothered up by all the recent news.

 

There is a good article on the death of Wall Street in today's online Wall Street Journal. Worth a read. Here is the link.

The Intelligent Investor - WSJ.com

 

I heard an interesting thing said be an older Gentleman while I was standing in the checkout line at a local Grocery Store. This gent said and I quote: "We don't need Congress to OK this bill because the Govt will be borrowing enough billions of Dollars from China to cover this mess." anic:

 

Dominoes anyone??

Argentine stock market tumbles nearly 10 percent
Posted: 05:07 PM ET
BUENOS AIRES, Argentina (CNN) — Like markets around the world, the stock market here sank Monday.
After the U.S. House of Representatives rejected a White House-backed $700 billion bailout plan that was intended to resuscitate swooning credit markets in the United States, Argentina’s principal index — the Merval — tumbled nearly 10 percent.
Miguel Kiguel, a former finance secretary who runs Econviews, an economic consulting firm in Buenos Aires, recommended calm.
“It’s important to be very prudent,” he said. “Because it is a moment in which the world is involved in great turbulence, in which surely we are going to receive far less investment, where financing is going to be very expensive. Companies are not going to invest, basically, because we are in a globalized world and people don’t know what’s going on either here or in the United States or in Europe. We are all disconcerted about how the world will follow.”
–From CNN’s Carolina Cayazzo

 

Wachovia is going to be bought out by Citi Group!!


Thats my bank!