Pharyngula

Posted by: SHV | September 21, 2008 3:32 PM

We are just feeling the early pre-shocks. It will be 2-3 more years before the economy hits bottom. Whoever wins in '08 will be a one term president and will likely be regarded as the Herbert Hoover of the 21st century. The Bushite philosophy of privatizing profit and socializing risk is really going to bite us and the next President in the a**, IMHO.

Posted by: Matt Heath | September 21, 2008 3:34 PM

Choosing that dumb broad, Sarah Palin, as his running mate proves he ain't taken it seriously.

Posted by: info_dump | September 21, 2008 3:35 PM

Man you scared me when I read "Obama has decided to quit". Should have known it was a joke.

Posted by: Moody834 | September 21, 2008 3:36 PM

For one moment I was like, "Whhhaaaaaat the fffu...". Then I saw that it had to be a joke. Then I checked out the link and laughed my ass off. Then I came back to share my experience, and Richard Harris [@ #1] pissed me off. *sigh*

Posted by: Nick Gotts | September 21, 2008 3:44 PM

we could require all banks in trouble (which seems to be all of them) to issue new shares, with the sale backed by the Treasury. If private investors buy the new shares, then the banks get their much-needed money at no cost to the taxpayer. If they don't, taxpayers at least end up with a share of the banks - and a share of any profits the banks make. - Kevin Anthoney on the end of the first link.

An interesting idea. So far as I can see, it would implement the line I've been taking, that a rescue of some sort was necessary, but the government (hence taxpayers) should get an appropriate degree of control in return. Any chance the Dems in Congress will press for something like this? Thought not!

Posted by: scott from Oregon | September 21, 2008 3:45 PM

That synapses did not go back far enough. The real estate "boom" was to cover for a recession that came after the tech bubble popped.

This was all the federal reserve's doing as it dropped and held interest rates to almost "free money" status.

Couple that with a golf course economy and little production of actual wealth, and you can see what the scam actually was.

Proclaim wealth by inflating housing to obscene levels and then use that proclaimed wealth to produce credit to run the golf courses...

The synapses failed to mention the millions of Americans who bought into this scheme, pulling out mass amounts of phony "wealth" out of their homes and buying mass amounts of stuff. Americans were giddy and irresponsible, quitting their real jobs to "get in on" the great free cash in home equity give-away.

Ponzi schemes end, and somebody always gets left holding the bag.

This time, it be the taxpayers.

This is only round one of this. There is another larger wave of housing failures coming this winter and next spring.

Which will lead to credit card debt going unpaid and more mass failings.

I jumped in (I am a builder) on this whole charade and made money and got out before the bust. Even a dumb carpenter like me saw this coming back in '04 and '05.

Where was Congress when all of this was coming down the chute? Ron Paul predicted this in '03, calling the Fannie debacle with great prescience.

Obama claims he came up with a plan to solve this, and then got a call from the federal chairman. Obama shut up like a good politician and let the banksters run roughshod over this process so that they could save their cash and use the cash of regular, hard working Americans. Obama the "change" agent. Yeah right...

Even your hero Obama knows where the government is centered, and it has nothing to do with elections and honest government.

Big government liberals on top of the repubs keep feeding these banks power, and this is what they do with that power...

And y'all agree to take it.

It is time to rethink the federal reserve and open up its inner circle to public scrutiny.

After all, the public is getting the royal reaming here, and inflation will make sure the corn cob is twisted but good...

Posted by: Sili | September 21, 2008 3:50 PM

If only there was a way to take away their nuclear toys (monkey with a loaded gun, anyone?), we'd be happy to welcome y'all over here. I'm the Canucks and the Mexicans feel similarly.

But as it is, we really really really really really really really really really really really really really really really hope you can somehow keep the nuts in check.

PLEASE!!

Posted by: Brandon | September 21, 2008 3:57 PM

Amphiox #13:
Yeah after reading it again I realized it was blatantly obvious what it was. It would be a very sad if McCain / Palin could just stroll right in to the presidency unopposed and after learning what they think it should be understandable why I needed a fresh pair of underwear after hearing Obama quit the race :P

Posted by: Nick Gotts | September 21, 2008 3:58 PM

S. Scott,

Sorry - I should have put a ;-) at the end. In fact, I knew the more usual denotation of MILF, but not exactly what the acronym was, so I googled it, and found the other MILF as well!

Posted by: Oskar Kennedy | September 21, 2008 4:13 PM

There's only one real lesson to be learned here. If you're going to screw up in America, screw up BIG. If you screw up, take out a loan you can't afford, fall behind on your mortgage and lose your house, nobody gives a mouse's balls. If you screw up, underwrite millions of bad loans and get so deep in the hole that you're hearing kangaroos mate, you'll be such a threat to the entire economy that the federal government will climb up on your desk, drop its red-and-white-striped pants and drop a trillion dollars just to fix your mistake.

[excerpted from my blog before someone does it for me] =)

Posted by: Richard Harris | September 21, 2008 4:16 PM

Moody834 @ # 8, sorry for pissing you off, but that woman gives me the creeps. It seems from what I hear that she has that effect on a fair percentage of the population. You don't like her, or rate her, do you? I thought it was only rednecks & religiots that liked her.

Posted by: Dean | September 21, 2008 4:24 PM

"Ron Paul predicted this in '03, calling the Fannie debacle with great prescience."

I'm sure he would claim this - haven't seen any facts that would support it (they may likely exist, I simply don't know). But, the mere fact that some consider Ron Paul to show any manner of integrity, honesty, or post-17th century intelligence, shows just how scary the current situation is.

Posted by: Benjamin Franklin | September 21, 2008 4:29 PM

MILF--

Mayors I'd Love to Fuck?

http://www.beyondhollywood.com/gallery/americas-sexiest-mayor-carmen-kontur-gronquist/

Posted by: herman | September 21, 2008 4:40 PM

My heart skipped a beat when I read the first sentence of the Obama bit.

Please, Americans, keep the idiots in check!

Posted by: Nick Gotts | September 21, 2008 4:49 PM

Ron Paul predicted this in '03, calling the Fannie debacle with great prescience. - Scott from Oregon

Showing the same awesome intellectual prowess as in his non-acceptance of the theory of evolution?

Posted by: amphiox | September 21, 2008 4:55 PM

The subprime lending fiasco is surely economic imbecility and malfeance of the highest order. Being pretty naive in the realm of economics, I can't say who's the idiot and who's the criminal, though.

Re "hearing kangaroos mate" - I know there are aussie biologists frequenting this here blog. What does it really sound like to hear kangaroos mate?

Posted by: Alan Chapman | September 21, 2008 5:12 PM

#24 Dean, it's just basic economics. It doesn't require some special insight. It happened many times before and it will continue to happen.

Posted by: Zeno | September 21, 2008 5:17 PM

I seem to recall hearing somewhere that any economic problem can be fixed by tax cuts for the rich. Isn't that right? So I guess sucking billions of dollars out of the U.S. Treasury and just giving it directly to millionaires and billionaires to bail out their businesses should be just as good. Gee, economics is real easy, isn't it?

Can we use tax cuts for the rich to solve the problem in Iraq, too? That would be cool.

Posted by: uncle frogy | September 21, 2008 5:28 PM

why should we believe this administration or its spokesmen about this plan especially when it concerns cost when all the other "plans" they have gotten implemented have seldom matched the "sales pitch" if ever?

Is the "American Empire" finally over?

It is my opinion that the "fall of the Soviet Union" was participated by the inability of the system to afford to fight a war in Bosnia, keep up with a international arms race and maintain a working domestic economy primarily due to the almost total lack of international credit. We on the other hand could finance our part by deficit financing.
Thanks to the management by our government how close are we to that point where we do not have as a government affordable credit?
These buy outs, take overs and "bridge loans" or what ever they call them this week, are made of borrowed money. Which we will have to pay for how?

Posted by: Quiet Desperation | September 21, 2008 5:37 PM

@Dean: Well, here's something:
http://www.lewrockwell.com/paul/paul128.html

Not a Ron Paul fan. Just in a helpful mood, and I was curious myself. :-)

See kids? Sharing is nice!

Posted by: Scott from Oregon | September 21, 2008 5:46 PM

"BFD. I predicted it (publicly) several years before that based on the study of financial history armed mainly with the insights of Lenin. It's a pretty fucking sad state of affairs when the analysts of capitalism in 2008 still haven't caught up to people like Lenin and Luxemburg".

And if someone as obtuse as you appear to be predicted this as well... you make my point for me. This was easily predictable. WHO in Washington stood up and declared this a bad thing? Ron Paul. Who else? Noone. Who made money on this? Take a hard look at Obama's financiers and "advisors". Take a look at Dodd's ties to Fannie and Freddie... Why did Obama shut up after he announced his "plan" to fix this mess? He knows who his puppeteers are and where the power lies.

It's all there.

"SfO contributes about as much to any political or economic discussion as Ms. Magicbritches does to a debate on religion. Boring, arrogant, thick, and useless. "

The simple truth is not always exciting. Remember, it was Toto who pulled back the curtain on the Wizard of Oz. Judging by the ignorance displayed around these parts, even my simple observations are far more enlightening than the go go gadget Obama! sycophantic shouts one reads here everyday.

"""The financial crisis besetting the major financial institutions has brought to light comments made by Ron Paul, in his testimony before the House Financial Services Committee on September 10 2003.

As Paul saw the situation some five years ago, the government backing isolated GSE management from market discipline. If Fannie and Freddie were not underwritten by the federal government, he told the committee, investors would demand the institutions held to higher management and accounting practices.

"Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market," Paul predicted. "This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.

"Despite the long-term damage to the economy inflicted by the government's interference in the housing market, the government's policy of diverting capital to other uses creates a short-term boom in housing," Paul went on. "Like all artificially created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing."""

Posted by: Scott from Oregon | September 21, 2008 5:52 PM

http://www.youtube.com/watch?v=fI4tVPXlQsM

This is one of the few in Congress who said absolutely NO to the Iraq war and warned of the usurpation of personal liberties as a result of 9-11.

Once again, he is swimming against the tide and telling it like it is.

Will you listen this time?

Posted by: Quiet Desperation | September 21, 2008 6:02 PM

FYI: Obamaman sees to be leading again.

http://www.electoral-vote.com/

Posted by: raven | September 21, 2008 6:10 PM

The answer is Yes, we are all screwed. Courtesy of the Death Cultists of the Theothuglicans.

The 700 billion bailout is just a guess. They have no idea what the liabilities are. They didn't even know this was a crisis until Wednesday, last week.

They have already committed another 200 billion or so to AIG and Bear and Money Markets.

This is going to go over a trillion at least. They don't have the money as the deficit this year is 500 billion, a record. So they will either borrow it or print it. And no one in their right mind is going to loan money to the morons in Washington DC right now.

Posted by: Fernando Magyar | September 21, 2008 6:15 PM

Well there are a few silver linings to the current economic crisis. It seems the god businesses are begining to suffer as well! This one was just around the corner from where I live. Anyone have any idea what such a building might be good for. It has a really nice steeple maybe it can be refurbished as a bat nursery or something.

http://i289.photobucket.com/albums/ll225/Fmagyar/ChurchForSale.jpg

Posted by: raven | September 21, 2008 6:22 PM

Treasury Secretary Henry Paulson stressed that time was critical to get the proposal passed and that changes to the administration's measure, which was sent to lawmakers on Saturday, could delay that approval, further unsettling global financial markets, which have already seen a number of stomach-churning days as the result of the biggest upheaval on Wall Street since the Great Depression.

Several things wrong with the bailout plan.
1. Paulson thinks it is an emergency and started on his plan on friday. He wants it by next friday. They spent 8 years creating this problem. Paulson thinks he can wave a magic wand and create a bailout for a trillion bucks in a few days. This is dumb.

2. Paulson helped cause this mess along with the Theothuglicans. Bush would have if he was ever more than semiconscious. We are expecting the clowns that brought about "The Greatest Financial Crisis" since the Great Depression to fix it with a few days of what passes for thought in their tiny minds. This is dumb, they should all be fired.

3. Paulson is dumb. Not even going to bother explaining this one.

Our place in the world, our military power in a dangerous world of ever shifting threats, and our social stability are contingent on a massive economy. Which is now very sick and run by morons.

This makes it less likely that McCain and crazy moose killer mom Palin will get elected. One would have to have a death wish to vote for the party that brought us a pointless multitrillion war in Iraq, piles of dead bodies here and there, and a failing country and economy.

I've said for months that the Death Cultists wanted to destroy the USA and head on back to the Dark Ages. Well here we are, off to a good start.

Posted by: Scott from Oregon | September 21, 2008 6:38 PM

""""1. Paulson thinks it is an emergency and started on his plan on friday. He wants it by next friday. They spent 8 years creating this problem. Paulson thinks he can wave a magic wand and create a bailout for a trillion bucks in a few days. This is dumb.

2. Paulson helped cause this mess along with the Theothuglicans. Bush would have if he was ever more than semiconscious. We are expecting the clowns that brought about "The Greatest Financial Crisis" since the Great Depression to fix it with a few days of what passes for thought in their tiny minds. This is dumb, they should all be fired.""""

Both Paulson AND Bernanke DENIED the inevitable just a few short months ago. It is all on You-Tube. Two lying assholes who are now going to "fix" the problem?

THEY ARE the problem.

And a complicit two fucked-up-party Congress.

The curtain has been pulled back folks. There's the Wizard!

Posted by: Jason | September 21, 2008 7:26 PM

I agree that Ron Paul has been predicting this type of disaster (though he and a few of his fellow libertarians aren't the only ones; much of the far left has been just as adamant about this coming catastrophe), and whether you agree with Ron Paul or not (I dont) he's certainly not the bad guy in this situation.
So what should you do?:
(I'm not an economic expert, but I'm no dunce either)
1) Put your money in a foreign currency; the U.S. dollar (and likely the Canadian dollar too) are going to take a hit, so things like the Euro look like better options (but there is the risk that this becomes a full scale global problem).
2) The free-market guys (the legitimate ones, not the lying assholes who are largely at fault here [though, how responsible you want to make the former for the existence of the latter is up to you]) will tell you to put your money in gold, because gold always seems to go up in a crisis. Personally, I always think this is a weird idea, as I agree with Warren Buffet: gold has no real utility, its just an uncommon mineral. But it will probably go up anyway, so what do I know?

That's all I can suggest right now, anyway, but anyone out there with their degree in economics ought to chime in; they know more that I do on what you should do in this situation.

And yes, its mostly people from both parties who are to blame (not quite everyone, but the 'lesser of two evils' voting strategy has finally bitten Americans in the ass [no offense intended])

Posted by: Scott from Oregon | September 21, 2008 7:31 PM

""Nader did. Just sayin'. And as an added benefit, Nader isn't trying to turn back the clock to the 19th century and is neither a religious fanatic nor a AGW denier.""

wow. just wow.

When was the last time Nader was elected? I can't recall...

Oh.

Posted by: Jadehawk | September 21, 2008 7:40 PM

your point being? Nader has done more for this country than pretty much anyone else. he's a lousy politician because he's not good at soundbites and smarminess, but if we're going to listen to someone who has predicted economic disasters etc, I'd rather support someone who isn't a lunatic who is trying to turn back the clock to the 19th century and is a religious fanatic, a AGW denier, and the best bet for wiping the USA off the map of countries-that-matter.

Posted by: Jason | September 21, 2008 7:46 PM

The sad part in all this is that the people really responsible are going to escape from all this (relatively) unscathed, and by the time the 'average' American figures out who is to blame (aside from himself) they will have already escaped to their private resort in Dubai on their personal learjet, with all your money in a briefcase.

Posted by: Jadehawk | September 21, 2008 7:58 PM

yes, I can totally see how making fun of me is a perfect proof that Ron Paul is none of those things.

Posted by: Sauceress | September 21, 2008 8:34 PM

#50 Fernando Magyar

Anyone have any idea what such a building might be good for

How about a spaghetti factory? Not too different from its past utility, and that stained glass window does have some basic resemblance to the FSM.

Posted by: Alan Chapman | September 21, 2008 8:57 PM

#56 ...put your money in gold, because gold always seems to go up in a crisis.

Actually, the value of gold has remained relatively constant for the past century. The government "dollar" has lost about 98% of its purchasing power during the same period. Printing paper money allows politicians to tax people indirectly. A 1913 "dollar" is worth about two cents today.

Posted by: amk | September 21, 2008 9:03 PM

From this:

If Wall Street gets away with this, it will represent an historic swindle of the American public -- all sugar for the villains, lasting pain and damage for the victims. My advice to Washington politicians: Stop, take a deep breath and examine what you are being told to do by so-called "responsible opinion." If this deal succeeds, I predict it will become a transforming event in American politics -- exposing the deep deformities in our democracy and launching a tidal wave of righteous anger and popular rebellion. As I have been saying for several months, this crisis has the potential to bring down one or both political parties, take your choice.

Bringing down a party? Does he mean replacing a party with a (currently) minor party in the 2 party system? AFAIK that's only happened after devastating wars before: the civil war in the US, and World War I in the UK.

Posted by: John C. Randolph | September 21, 2008 9:25 PM

PZ,

The essay you linked to left out some rather crucial information. The rather glaring omission is that there was no mention at all of the Federal Reserve, which provided the unlimited line of credit at absurdly low rates which made the mortgage bubble possible in the first place.

The way that banking should work, is that banks lend out their deposits, not their credit. When they get short on deposits to lend, the interest rates rise, reflecting the scarcity of capital. Higher interest rates make borrowers more careful about what they buy with borrowed money.

As long as we have the Federal Reserve, we will continue to have a series of bubbles, crises, and bailouts, the overall effect of which is to transfer wealth to the banks that own the Fed, not just from taxpayers, but from everyone who has dollars in savings.

The Federal Reserve caused the first Great Depression (Bernanke has even admitted as much), and it's brought us to the brink of the second. What astounds me about this mess is that our congress is so willing to shirk its duty that they would even consider writing a $700 billion blank check.

That $700B won't be coming from income taxes. The only source for that kind of cash in a hurry is inflation, and if this measure is passed, the Fed will make an entry in a database and inflate the dollar to cover the bill.

A free market requires profit and loss to sort out where resources should be invested. By interfering to shelter investors from losses, the government encourages dangerous choices, such as writing loans without due diligence to find out if the borrower can pay them, or whether the property mortgaged is worth the amount of the loan.

I see several places where the blame belongs here, in descending order:

1) The congress, for shirking their duty "to coin money and regulate the value thereof". The constitution doesn't permit the congress to delegate this authority even to the executive, let alone a private cartel of banks.

2) the Federal Reserve, which exists to transfer wealth from all of us to its owners by inflating the money. We can thank J. P. Morgan and John D. Rockefeller for the existence of this monster. We should have heeded Jefferson's warnings about letting banks control the money supply.

3) Fannie Mae and Freddie Mac, which are government-created companies whose purpose is to churn loan paper in the greatest possible volume.

4) Loan originators like Countrywide Financial, which routinely lied about the soundness of loan paper they were reselling.

The right thing to do here is to let the people and institutions who made the bad bets take their losses, let the market reprice these assets at a realistic level, and stop trying to keep the bubble inflated. Right now, the government has their 1929 game plan in hand, and they're following it all over again.

-jcr

Posted by: John C. Randolph | September 21, 2008 9:31 PM

Put your money in a foreign currency

Jason,

That can help to an extent for a little while, but when the dollar goes south, so will all the other currencies. The central banks have been colluding to inflate all of their currencies in tandem for many decades now, and most foreign currencies are only backed by their banks' dollar accounts. When the US dollar crashes, so do they.

The only safe haven is hard assets.

-jcr

Posted by: Meur | September 21, 2008 9:35 PM

Speaking of polls, here's one that asks "Is Palin qualified to be the Vice President?" "Yes" is winning.

I think we should let the goons at NBC precisely what we think.

http://www.pbs.org/now/polls/poll-435.html

Posted by: clinteas | September 21, 2008 9:37 PM

Good point about the fact that whoever wins the presidency will be in deep shit and is going to be blamed for all the economical shit thats going to happen.

What baffles me,leaves me speechless and rubbing my eyes in wonderment,is that nobody,anywhere in the media,apart from Bill Maher and a handful of bloggers maybe,points out the fact that McCain is the Elitist here,the guy who surrounds himself with rich and important and famous people,noone points out how the Republicans would eviscerate Obama if he was the one showing up at the Convention with his knocked up black underage daughter,but for Palin its groovy??Noone,again apart from some bloggers,will even dare to critisize that Palin thing anymore,there is so much wrong with this woman that one doesnt even know where to start,but why is the Media not touching her???
WTF is the media in the US doing??(You can probably tell that Im a tad frustrated lol)

Posted by: Kel | September 21, 2008 9:55 PM

Noone,again apart from some bloggers,will even dare to critisize that Palin thing anymore,there is so much wrong with this woman that one doesnt even know where to start,but why is the Media not touching her???

It reminds me of that episode of the Simpsons where NASA picks Homer to go into space. Why isn't the media asking "no seriously, is this a joke?" and ending with Palin damning us all to hell.