The United States Economy

[blue_tetris]

I've been against the bailout all along. And now I get to declare "Told you so!" even if I can't establish causality. Because I want to.
The bailout happened, and the economy still SUCKS.
http://finance.google.com/finance?q=IND ... DEXSP:.INX

I second that!

[Atilla]

I don't think anyone believed the bailout would instantly stop the economy from sucking. A degree of suck was inevitable. The question to be asked is whether the economy would suck even more had the bailout not occurred.

Mind you, many of the tax breaks and stuff they added are pretty ridiculous.

[MattKestrel]

Well, the FTSEs managed to drop below 4000. Now what?

[jean-luc]

Keep in mind, though, that several other countries (Russia and Japan, most notably) launched a very similar bailout last week, and they aren't seeing any improvement relative to other countries and projections.

[capt_weasle]

"Hey! Let's buy a new home on our already awful credit and blame Bush!"

A lot of this is from people who cannot control their own financing, though I realize there are other factors.

[jean-luc]

I think that the blame rests much more squarely on the bankers. Keep in mind here that the bankers, the finance professionals, are supposed to know better. In the banking industry it's standard practice to assume that the consumer is a moron (it's like software that way). these bankers knew that the loans they were issuing were crap, and there was widespread belief that it was going to backfire, but they were making so much money that they ignored the reality of it and continued issuing mortgages that they expected to default.

Not so many years ago, getting a mortgage was difficult. the loan officer acted like they were doing you a rare favor to trust you with the banks money. Your income, job stability, credit history, etc... were absolutely scrutinized before the bank issued a significant loan. banks would never have issued the kinds of mortgages that they do now.

But now, they've seen easy money. They started issuing loans every which way, and they knew that many of these would default, but they were making good money. so they did it anyway. They knew better, but they didn't care. And what really bugs me about all of this, is how do we respond to their stupid shortsightedness? we give them US$700 billion.

[blue_tetris]

It's like these financial institutions dicked around because they knew they'd get bailed. What if there was a guy who said: "Hey, go head and play roulette! If you lose, I'll give you $10,000 and you don't have to worry about the debt. If you win, you can keep the full $350,000!" Well, the bankers gambled, lost, and now the government is using our money to cover their gambling debts. But they alone would have benefitted from their success.

They had no incentive not to risk it. And, knowing that they'll have more government money in the future, they'll have no future incentive to play safe, either.

[Turiski]

Well, I don't claim to know everything, especially about something that's been boiling for longer than I've been alive, but I do know a bit about how this "bailout" was supposed to work.

First, it was never a sure-fire thing. It was just the best strategy that we could come up with in a couple months when all these banks started being screwed. Not 100% success chance, but not 0%.

Second, and most importantly, that word "bailout" has completely destroyed the credibility of the plan. We're not handing them money. We (interestingly) are giving them a loan. The idea... and ideas never work in practice like they do in theory, but I'm just saying... was that at some point the government would get that $700 billion +/- $700 billion back with a bit of interest, when the banks had given enough reliable loans to pay the government back.

That, of course, begs the question: How real is this money anyway, but that's probably something we should have been asking in 1929, too. It's a little bit late to be worrying about that ;-)

[jean-luc]

Holy crap, that's the worst thing. You know what one of their planned sources of this $700 billion is? they're going to PRINT MORE MONEY. we're already falling compared to stable currency standards. You know what happens when governments print more money like that? sooner or later everyone is a multi billionare. Except for a loaf of bread costs 180 million. it will totally ruin a government's economy. we can watch it happening to certain 'developing countries' as we speak.

[Turiski]

Actually, it's worse than that. They aren't actually going to PRINT that money. They're just going to say that hopefully someday that money will exist.

That's what credit is (I think?), and that's why I want to cringe whenever I hear people use the word "trillion" and "dollars" right next to each other.

[scythe]

The crisis is still going on, and the bailouts keep piling up. Here's some more great news:
http://www.bloomberg.com/apps/news?pid= ... refer=home

I still can't believe the bailout bills ever went through. What the hell, Congress?

[jean-luc]

on top of all that, the International Monetary Fund is now creating a fund for a WORLD bail out. China, in proper China style, is contributing exactly US$0 of their US$1.9 trillion reserves.