I don't know, Tobold. My rep flat out refused to listen to his constituents. He was defeated in the primary a bit ago, so perhaps he's just a spiteful git. The system isn't completely broken yet, but there are obviously some who can't let go of the power.

...but aye, it's heartening to think that they actually might listen, even if it's only out of fear of losing their job.
 

http://www.sinfest.net/archive_page.php?comicID=2947

That about sums it up.
 

I wonder if it would have worked so well if an election hadn't been so close. No-one wants to risk their job in poor economic climate - even representatives.
 

Here's a post that argues the opposite: http://www.fivethirtyeight.com/2008/09/swing-district-congressmen-doomed.html

Congressmen NOT facing re-election hugely voted in favour of the measure. Those going into contested re-elections were more inclined to vote against it. Conclusion: democracy leads to short-sighted policies.

I only read two blogs on the internet: Yours and fivethirtyeight.com. They rarely hit the same topic. What interesting times we live in...
 

As an Aussie who loves buying shares, I have to welcome the US Congress decision, even if it means it has impact on the Australian market.

These companies need to learn a hard lesson; for all their complaints about the government 'interfering in free markets' when times were good for them; the gate doesn't swing both ways when in their greed they face going out of business.
 

This whole mess started with the bad idea known as Fannie Mae and Freddie Mac, but it ultimately reached the current crisis level because some 'very smart people' on Wall Street figured out they could turn a profit on bad loans by selling them in packages to naieve investors. The plan put forward by our Congressional leaders is, at its most basic level, a plan to buyout the bad loans from the naieve people that bought them the first time. I'm no financial supergenius but it seems obvious that Congress is just another naieve buyer being conned by Wall Street. Democrats are calling this a failure of Republicans while Republicans call it a failure of Democrats; everyone wants to ram this through and claim hero status for fixing something they all broke in the first place by creating Fannie and Freddie while at the same time casting their opposition as the villian for calling them on it. The whole thing is a real problem, maybe even a crisis, but the best option at this point is not to bail out anyone or anything; just let it regress and fix itself. Yes, it will be painful short term. Yes, it will cause the people in power to have to answer some uncomfortable questions. Good. Several years of financial difficulty are inevitable and this $700 Bn dollar deal is only a bandaid to slow it's arrival. Greedy Washington politicians coming up with creative ways to extend the current situation is how we got Fannie and Freddie in the first place; it always causes the eventual market correction to be even more painful. I'm not saying to just let it all burn, but I will say that loaning $700 Bn dollars THAT WE DONT HAVE is a really bad plan especially when it's supposedly going to be used to buy up other equally bad loans.
 

Yeah I've heard the swing vote argument, but is that bad or good? Is it really the "opposite"? Were they voting against because they were afraid? Or were others voting for because they don't care?

I find it interesting both sides are saying "we are bipartisan but they are not". Even their calls for bipartisanship are partisan.

There was no reform in the bill, just money to be handed out and some oversight added. But no reform to stop us from getting in the same situation. Nor did the bill address increasing FDIC limits which haven't changed in decades, and retirees pulling out their money was just as much a contributor to WaMu and Wachovia's problems than mortgage backed securities. Yet that problems isn't even addressed.

Nor have they explained how this will help the common man, who's problems are more related to high commodity prices. We've lived with this upcoming for years, we don't need to panic and fix it in one week, we can go a month talking and figuring out the best course.

One thing is sure, when everyone is panicking is the wrong time to make sweeping changes that will change the face of the country. No matter what the reason they voted cooler heads need to prevail.
 

I agree 100%. Finally a case where Republicans seem to practice fiscal conservation. To rush into that big of a bailout (essentially 8% of the US total GDP) without looking at alternatives would have been a mistake and sent the wrong message to other companies in financial trouble imo.

Wolfgangdoom
 

One of the reasons Democracy works is because you elect a handful of leader to make informed decisions for the poeple. The crowds most often can not make wise decisions on matters they don't have the time to learn about. It is the reponsibility of the elected handful to make the best choice. Sometimes this will be counter to the voice of the people which is a very hard thing for the elected to do but is the right thing. Given the voting patterns with contested districts and such I don't think the right thing was done overall.
 

Pendan, so we're back to "enlightened philosopher kings"? Sorry, but I don't trust them that far. If I wanted that sort of leadership, I'd find a nice monarchy or dictatorship to move to.

The point of a representative government is the checks and balances. Yes, leaders need to lead, but they are also "civil servants" who are legally responsible to listen to their constituents.

My rep basically said that he doesn't have to listen to the people he's representing. Why should I keep him in office if he's not doing his job?
 

Good point Tobold. on the plus side, perhaps we will get a better deal for taxpayers instead because I very much doubt they will just sit on their hands. They love to write laws after all. I say throw all the bad loan makers in jail for life for stealing and causing such a problem and then reinvoke the saccs law preventing banks from behaving like high risk financial brokers. Separating the two is important.

As far as letting things go out of business we might have a problem if the knock off includes our favorites companies like, oh say, Bank of America and Visa...
 

As Anonymous points out, this was not an example of good government. I agree that it's good when politicians don't just follow the party line, but those who voted against their parties this time were generally doing so for the wrong reasons (such as to stay in favor with ignorant constituents).

But it does raise a fundamental question of democratic systems. Is an elected official intended to be a mouthpiece or a leader? Should he merely vote according to what he believes the majority of his constituents would want? Or should he vote according to his own judgment?

Personally, I prefer to elect independent leaders based on their patterns of judgment, but I'm well aware that many of my fellow countrymen believe in more direct control.
 

This bill might not have been a good one. Through some very limited second-hand research, it seems like it might have been. However, if we don't get _something_ soon, we could be hurting worse than having to shell out 700 billion as tax payers.
 

OMG I hope they are not listening to their constituents on matters like this. I hope they are doing what "They're INFORMED opinion tells them to." From what I've seen thats what they've been doing. There were several options that were not being explored that had been used in the past and had not been brought up yet. Options that didn't cost 700 billion dollars.
 

Tesh it is not the same at all because you can vote them out. That is the check and balance. You can't do that with monarch or dictator.

There is a difference between consistently not listening to those you are representing and making a hard choice once in a while over the ignorance of your constituents. Those not worried about losing their job in a little over a month made a different choice in general and that tells me this was one of those times to do the right thing instead of the ask for thing.
 

Pendan, again, you're assuming that I trust them for the time of their tenure, or that they are always the best for the job, or that world events are static for the duration. When public sentiment changes at times that don't align with voting cycles, what then?

Sitting reps can do a lot of damage if they diverge from either the promises and positions that got them the job (like that ever happens, aye?), or from the current sentiment of the people that gave them the job.

The people have to be able to influence their representatives, or else the whole concept of "by the people, for the people" goes out the window.
 

The "bail-out" is NOT the buying of bad debt. The Bail-out is the dripping of fiscal liquidity back into the money markets.

The money would be drip-fed, as mentioned, over the course of years, and is NOT meant to be buying of bad debt - it is intended to get the markets flowing again, as it is now banks are not lending money to each other like they used to - and indeed are hoarding the money in an effort to stave off collapse and in doing so are crippling the markets.

What this means for your average person is when you want to go to the bank to get a loan to start a business, to get a mortgage in order to buy your first house, etc etc, you WONT BE ABLE TO because banks will either not be able to lend money or simply wont be willing to lend money full stop, thats what it means to your average person when they cant afford their mortage payments because a bank is unable to borrow money and has to call in its own debts.

All people see is "oh noes, increase in taxes" and people need to learn to listen to what is said instead of what they think is being said.

The only place bad debt is being "bought" by the bucket is the current nationalisation spree going on in Europe.
 

If "credit" isn't flowing, capital takes the rein. Prices come back to where people are willing to pay them. That's a natural business cycle. Interfering with it causes prices to remain misvalued. It's only prolonging the lie and making for a worse crash down the road.

Companies, including banks, who offer appropriately priced goods and services will see customers, and those who continue to lie will lose business. Giving money to the liars, under whatever pretense, is still a moral hazard that sets the system up for further abuse.
 

Tyranny is bad in any incarnation. We rebelled against King George for his tyranny. But now we've fallen prey to the tyranny of the masses.

There is a reason our founders established a constitutionally limited republic. It was to prevent mob-rule from infringing on individual rights.

Even England should understand that. After all, you gave us the Magna Carta.

There are many practical reasons why rewarding the bad judgment of Wall Street is wrong. But they all reduce to: It's not right to redistribute wealth by force.

To quote Le Gendre: "Laissez-nous faire!"
 

What we have in America is a hybrid: a democratic republic. Not just a republic, not just a democracy. Both of those systems result in tyranny, the first by people who are unaccountable, the second due to the passions of the masses.

The motivations hardly matter, as long as in the end you get a better government.

None of that has anything to do with whether the bill was wise in that incarnation. After all, we have the people who are part of the problem - Dodd, Frank, etc, acting like the saviors, and our media is not asking tough questions, just piling on the hysteria. Youtube is pulling down videos of Frank on C-Span from a few years ago all angry stating reform was not needed.

Barney Frank was quoted last week saying "I think we're past the point of questioning whether this is the right thing to do or not" so he outright admitted they're not trying to figure out the right thing, they're just trying anything because "we have to do SOMETHING". That sentiment has been at the core of much abuse of our rights over and over - panicking and trying anything at all. Our "informed" leaders should not be panicking saying we need to do something without asking if it's the right thing to do!

Though I admit I trust Paulson a hell of a lot more than these politicians who've taken tons of money from Fannie and Freddie, we are not giving Paulson money to spend wisely, we're giving the Treasury Secretary that money, and he won't be the Secretary in a few months since he's stated he's stepping down even though many Democrats want him to stay. (Not to mention giving one person that power isn't that smart even if you like the guy).
 

"The motivations hardly matter, as long as in the end you get a better government."

If you think that's true then observe the disgusting farce that is the (American) Libertarian Party. They don't think motives matter either and they advocate all sorts of statist policies.

As for whatever money might be given to Paulson, or anyone, it has to come from somewhere and the only place it can come from is private producers. The government is supposed to protect us from theft, not be the biggest robber of all.

Getting back to Tobold's post: No democracy can be just which does not protect the minority. (And the smallest minority is the individual.)
 

Debate is over. Wall Street wins, as usually.

Debt based economy is a must for the high finance. Lower wages, high interest rates are the magic formula to keep us all constantly in debt and having to borrow (from credit cards to mortgages) in order to attain some level of comfort.

That is why the banks always had huge profits. Up until now, where they have bled the people dry.

This bail-out will only keep the status quo for a few more years and when the crisis returns, it will return with vengeance.

I just hope that the american people will not be as blind as the rest of the world and do indeed open their eyes to what's going on.

And i say this to the americans because the same government that will give 700$bn to Wall Street is the same government that does not provide healthcare to all it's citizens...

Take a look at America, that's where the rest of the world is going.
 

Lower wages, high interest rates

what are you talking about? We haven't had high interest rates in a long time. Actually with the increase in commodity prices lately some think we are experiencing inflation which means maybe we should have higher interest rates, if it weren't for the credit crunch we're already experiencing.

That is why the banks always had huge profits. Up until now, where they have bled the people dry.

Banks provide loans for your farm, small business, whatever, to invest in capital and make even more money. You don't take out a loan unless you are going to use that money to make even more. And yes, it's foolish for consumers to rack up debt on things they can't afford, but that's the consumer's fault (unless some lying or fraud was perpetrated). I can't blame anyone else when I do something dumb. I made the mistake of racking up debt when I was younger, I paid it off and am never going to do that again. When I bought a house, I bought a house I could afford.

The thousands of years when people thought of interest as ursury and people thought banks only existed to rip people off resulted in subsistence farming and almost zero growth. Without lending and interest we are stuck in Malthus's world where we can't even feed people, let alone grow our economies and make people's lives better.

This bail-out will only keep the status quo for a few more years and when the crisis returns, it will return with vengeance.

True because there is no reform in the bill.

But what reform is needed? Depending on who you talk to, either this was caused by "greed of investment banks" or it was caused by government intervention in the markets starting in the 90s. Even back then this crisis was predicted by the NYT of all papers, since Fannie and Freddie are only quasi private, everything they do carries the weight of government backing.

If the government is saying "Give more high risk loans to people you wouldn't have normally and we'll back you" it is only a matter of time before it blows up in our faces.

There are a lot of things that led to this, to blame one small group of people for being greedy is simply not looking at the evidence.
 

First of all, the interest rates become high when you compare them to the average income of families. Wages are being kept low for "fear of inflation". If wages are low, people cannot save for their projects for it would take too much time to save the needed income and also, when they get the loan, it will take long time to repay the debt. In the mean time, the banker gets wealthier. The more people consume and the lower their income the more they will borrow. Interest is the new wheat.

Banks make their profit on debt. So the more they loan, the more they profit, unless people stop paying.

Now it is true that US government provide some directives towards making credit more accessible to low income people, but it did not provide any kind on regulation. But you have to realize that over 50% of the subprime loans were not given by institutions to which that directives were targeted.

Surely some executives realized that when the housing bubble busted it would mean the end of the party, so they started to convert the trash mortgages into CDO's. Those were and are an obscure "innovation" (not to say fraud) and they were sold to investors all over the world.

The bottom line is, it was greed that caused this crisis. Greed and lack of regulation or alternatively, lack of enforcing of the exiting one.