Sold to you.

GROCK, just went there and got this: This video has been removed by the user.

It didn't say anything about the bailout having to include foreign interests in order to protect the derivative market did it?

Hmmm...so Paulson's refusal and Bush's veto of the plan if the foreign bank provision was removed is not salient. I believe your belief that they would not bail them out is contradicted by their actions. Observe them in action. First they tried to blast the bill through using scare tactics. Then Paulsen said he would brook no changes. Now a part of the bill has been exposed to bail foreign banks. What else do we not know of at this time? Have they been truthful?

I've got a beautiful bridge in Brooklyn I need to sell you ASAP!

There is one reason I can think of right of the hat: The owners of the countries mentioned might be really pissed off at having been had with all those beautiful investment vehicles the smart boys & gals at Wall street invented.
They might want some of their money back, and being the rich boys from over there, they could have the clout to get some of it.
The big bullies fighting over the loot of the school, leaving all the kids bruised and battered in exchange for all their money and i-pods&phones.
Pathetic. Pathologic.

Paulson is the messenger.
Acting in his capacity of member of the board of directors of the IMF, not as treasury secretary, this is why he can afford to be so arrogant.

He is Guido with the baseball bat, the senators are the drunk daddy that lost his paycheck at the poker table and likes to keep his knee caps, and the tax payers are the babies crying in their crib for a tit to suck on.

Daddy has no balls and the kids don't want to grow up.

Noizette

I'm guessing all this is to protect the derivatives market and as that is global then foreign banks must be included, but in that case I would think Denninger has a point that the cost shouldn't be carried by the US taxpayer alone if they are carried at all.

"Adding something would mean describing the situation better, e.g. to be very mild, that global finance is so complex that the appellation ‘foreign’ is meaningless."

But "US Taxpayer" is not meaningless.

This bill is a monstrosity.

I agree. The markets should be hard down this month, in the first of several cascades over the next couple of years. The bill is an opportunistic power grab that will do nothing at all to prevent the great deleveraging that is underway, but will leave a legacy of unaccountable power, ripe for abuse.

I do expect a significant rally into the end of the year though, probably following a temporary bottom (a spike low?) near the end of October. My guess is that the decline would resume, with the beginnings of the next cascade starting in the New Year. 2009 will be the year when Wall Street takes Main Street down with it.

C_A - You do not understand, THIS IS NOT A BAILOUT.

Yes the wealthy will make out like bandits as they always do but the issue is appeasing the creaditors of the Worlds largest Subprime Borrower, The USA.

If USA looses the ability to borrow then YES the World Will Suffer.

Cheer...... ah screw it.

I agree that Friedman is an ass, but Hayek gets a bad rap.

If you read "Road To Serfdom", Hayek carefully describes the areas which free markets will be unable to address including, but not limited to, roads, hospitals and care of the elderly. He advocates that these needed services be provided by governments using tax dollars.

Free-market fundamentalist have absconded with Adam Smith and Friedrich Hayek; they put words in their respective mouths, and count on our having not read them. I believe, based on my reading, that Smith(and Hayek) would be appalled by what we justify in his name.

To put it super simple: Financiers and traders groan or laugh and do high fives, “the market shows”, analysts say “the market tells us”, “the market decided”, etc. as if it were God or some superior entity to be obeyed.

Crucial decisions are given over to the collective, averaged accumulation, of a small class of people who ‘bet’.

The position is: the horse who wins is not the horse who wins the race, but the horse who most of the bettors expected to win the race! So you can do away with the horses entirely.

Now, that would be OK if the bettors just stayed amongst themselves, then they would soon see that things average out and their bets aren’t in the long run winning ones.

But these bettors drag in some huge % of ppl in the world who invest their money on the touted favorable odds... and can thru their actions manipulate the odds enough so that profits do come in for some time...

I am unaware of a way to see total votes but will ask SuperG.
I am pronuclear because I think we need everything we can get, but also pro- addressing end goals before we waste another 10 years of energy.

As to rational solutions, it is pretty evident that in times of crises (and even not), we are not exactly rational creatures, and will grab at anything that puts out the immediate fire. Thats why TOD exists, to try and get knowledge and awareness of the manifold issues that confront an energy constrained planet out in the open and discussed. Social equity - as measured by the GINI coefficient and in other ways - is one aspect of this problem - capitalism will be mightily stretched if 1% of the people hold 99% of the wealth. This is not a 'socialist' site, nor it is a 'capitalist' site - but I think in general, the contributors and commenters here recognize the current model isn't exactly working well...

It's not even leftist per se, as much as it is pure willful ignorance. I looked at that post with the -29 rating, and said "whoa he must have insulted someone's mama". But no, nothing like that. It is amazing to know that the majority of the readers here do not understand the basic principles of the free market.

Nor do they understand that countries and economies are not governed by any economic model; they are governed by Hegelian principles. Mafia rule.

No matter what economic model you follow, if corrupt criminals control it and dumbed down morons vote for it through Hegelian manipulation, then bad things are going to happen. I bet every single person who rated down that post has no understanding of the damage being done right now by the SEC's selective ban on shortselling. I bet they all love it. And they're gonna love being in a bread line too. The disconnect is staggering, even on a site such as this.

Thanks for that perspective Toil...nice rebuttal.

Free markets are self regulating. If we had free markets in the US you might observe that, but what you are observing are rigged markets, and of course they are not self regulating. Laws were passed to impose the will of government on markets in order to benefit few at the expense of many, and what you are witnessing is what happens when free markets are not allowed to operate, and socialism is substituted instead.

So if you don't like what is happening, please place the blame where the blame is due, and not on freedom.

I agree.

Consider the credit cycle.
Pretend that you are a small bank.
What is your winning strategy?

• Loan like a maniac while credit is expanding and the economy is booming.
• Just before the big squeeze comes, withdraw all credit.

This winning strategy is the opposite of what a regulator would want to do.

And "corporate profits" go to people who risked their income to invest in the company... which is how it should be.

What's your reference for that statement of fiction? Why should the profits of hard work go only to the investors who (may have) put up some of their savings to finance a venture, and none to the wage-earning workers who operate the venture, manufacture and assemble its product, sell it, ship it, track it, and collect payment for it?

The employees of a company have a more concentrated investment in their place of work than do investors of only money. There are only so many hours in a week that a worker can invest his time. Someone with especially good health and invests no time in his children, other family members, and the rest of the community may be able to split his time between 2 or 3 jobs while money investors can spread their risk among hundreds or even thousands of enterprises. If someone at the top of the company makes a stupid mistake hundreds and even thousands of employees, many of whom are excellent employees, may lose their income, pensions, health care, the chance of their children having a better life, etc. So who takes the bigger chance? The one who invests time and skills in a single company or the investor who spreads his risk among many companies?

No doubt, that is true in a "free economy."

Where in the world does such a thing exist? Not where I live. Not even in my relatively exalted position -- the Government and the insurance companies tell me what they will pay for my services, and I have no freedom to negotiate, nor can I collect more than their imposed payment schedule from patients -- by the terms of their unilaterally imposed contract.

I am free, of course, to refuse to participate with these entities, but the "free market" has seen to it that virtually no one outside their domains has any money -- the "uninsured" are unable to afford "insurance", or much of anything else.

Although insurance companies are free to combine against me to impose these contracts, if a dozen physicians get together to impose some sort of solidarity on the "negotiations" each contract year, then the Federal FTC will see to it that the upstarts are threatened with fines and jail time.

Medicine, like "Defense", and now we see "Banking" is nothing but corporate socialism.

I would be happy to compete in a "free" market. I have never seen one.

I quoted the part of your statement I was taking issue with. 31.8% and 23.7% is not virtually eliminated in my opinion.

"Take into account that the two use different measures for "inflation" adjustment and the gap is even smaller."

I think you have it backwards. Take the difference into account and the gap probably becomes much bigger. But you don't seem keen on backing up your assertions with much argument or data.

In a capitalist nation, you can't expect the gap to be nonexistent.

You clearly confuse Capitalist with Corporatist / Fascist.

I recommended nothing. Corruption is being fought with laws and institutions to enforce those laws.

There are countries with strong institutions and laws and others where those institutions are being bought and paid for by private interests. It seems to me in US we are having the whole government being bought by the Wall Street gang. Hell our financial minister used to be a chairman of the biggest bank... How is this possible at all?? I think all this was set up long time ago - I would date it at the moment the FED (a collection of private enterprises itself) was established and started persuing its "dual" goals of "growth" vs stability. The purpose of a central bank should be the stability of the financial system! It is not to sponsor some corrupt gamblers or save their asses when they fail on the expense of all of us.

As a Canadian, I think you oversell us a little bit.

Govt. mortgage insurance was and still is restricted to only those mortgages where the buyer puts up a 10% down payment. This is actually not true. CMHC-backed, $0-down, 40-year mortgages have been available for a couple years now, but in response to the US housing crisis, they are being eliminated soon (off the top of my head, at the end of the year, but I could be wrong about the timing).

Only one Canadian bank, CIBC, had any significant losses in the stupid "Sub-prime" fiasco, $300 million (not a serious problem for them). Actually, there's at least $32 billion in asset-back paper that was bought in part by all of the major banks as well as some larger pension plans and other interests, which is currently locked up in a government-mediated plan to convert them, from what I hear, to long term bonds. This is separate from major writedowns that ALL major banks have made in the last year and a half, not just Scotia. But you're correct in that the amounts don't seem overwhelming, if nonetheless large.

Also noteworthy, Cdn governments all are running surplus, have been for years, voters demand it. $9.2 billion federal this year. And big automakers say they prefer to locate here because universal medicare takes a huge direct and administrative cost off their books. All fairly accurate. I'm not sure voter demand for continued surpluses is a dealbreaker, to be honest, but we don't really have a federal party currently strong enough on other grounds to get away with deficits (absent some pressing external justification, like, say, a serious recession...).

THAT's what a free MARKET economy is supposed to look like, not that stupid neo-con nut-job you yanks are running.

It's a mixed market or social market economy. I don't know how you can justify calling it a free market, and I don't know why you'd want to, either.

And BTW, house prices are STILL gradually going up in most of Canada.

Less and less gradually with each month. It's still difficult to say whether this is a levelling or the beginning of a downward slide or something more dramatic. The fact simply doesn't prove your point.

In the years of slavery there was also free market, and actually slaves were one of the most critical "commodities".

But I think you were partially right and I was incorrect in blaming the free market; it is capitalism which creates concentrations of wealth, by the simple mechanism that the more capital you have access to, the more economic power you have and the better position you have in the market place. This makes the market "free" only in theory, because in practice one needs copious amounts of capital in order to compete mature and successful businesses.

The shock of this crisis is , I hope, waking up a lot of people to the fact that the aristocracy has been systematically ripping them off.

Unfortunately, as Naomi Klein points out in "The Shock Doctrine", shock often actually does the opposite: people "regress" from a more rational and reasoned state to a more emotional and reactive state. Basically, people in states of shock look for leaders or parental-like figures to tell them what to do (i.e. they become child-like). Friedman et al actually advocate using shock-generating events to "turn the politically [edit: should be *impossible*] possible into the politically inevitable", [edit: this is Klein quoting Friedman, p. 7 of "The Shock Doctrine"] where the actions that are taken tend to be based on the ideas that are lying around at the time; they made it their mission to ensure that the ideas available at such times were the ones they advocate (and thus we get massive handouts to the people who created this mess in the first place instead of actions that might actually help the situation).

Now we are seeing the culmination of their efforts on the domestic front. (I'm not saying they necessarily planned this crisis, but they are certainly taking advantage of it.) Naomi Klein is predicting that we can expect that (Shock #2:) the fallout from this bailout package (i.e. the insolvency of the federal gov't) will be used as justification for the privatisation of social security and further cutbacks to social programs.

The good news is shock wears off (unless it's followed by another round of shocks). And *that* is when you can expect people to start looking for the ones who did this to them. You just better hope they aren't fed a massive diet of propaganda in the mean time redirecting their efforts onto some poor scapegoat...