You Have To Be Shitting Me

This is unbelievable:

The federal government is working on a sweeping series of programs that would represent perhaps the biggest intervention in financial markets since the 1930s, embracing the need for a comprehensive approach to the financial crisis after a series of ad hoc rescues.

At the center of the potential plan is a mechanism that would take bad assets off the balance sheets of financial companies, said people familiar with the matter, a device that echoes similar moves taken in past financial crises. The size of the entity could reach hundreds of billions of dollars, one person said.

In other words, folks spent years making billions upon billions of dollars on risky transactions, more money on the stock of companies that was artificially high based on those transactions, more money bundling all those transactions into more transactions, and made a killing, and when it turns out the whole thing is a big pile of shit, you and I get the god damned bill.

I do not ever want to hear another damned word about the free market. I don’t want to hear another thing about letting the market regulate itself. I don’t want to hear about the free flow of capital. I don’t want to hear about government getting out of our lives.

None of it. From superfunds to super-bailouts, I am tired of other people getting rich being irresponsible and then being told I have to pay to clean it up. I didn’t read one punitive aspect of this new plan. Not one punishment for the people who did this.






111 replies
  1. 1
    dms says:

    Not too mention how we don’t have enough money to fund this or that…like education, health care, etc.

  2. 2
    r€nato says:

    Bra-vo John.

    I also don’t ever want to hear again from insufferable Wall Street/corporate elitist pricks, about how we need to get rid of welfare and the social safety net and how national health care is EEEEVIIIILLLL and how those proles could make ends meet if they’d just get off their lazy asses and work.

    Where’s MY bailout?

  3. 3
    Dreggas says:

    Welcome to what I have been saying for a long time.

    Now McCain is on the TeeVee saying this is all Fannie and Freddie’s fault which is complete bullshit since Fannie and Freddie had standards. Which led to the rise of subprime lending. Fannie and Freddie didn’t do subprime loans. I hope someone calls him on this because it’s anothe line of horse shit.

  4. 4
    Surly Duff says:

    But John, if we punish those responsible, how will they reinvest the capital and produce the economic growth to get us all out of this mess?

  5. 5
    Incertus says:

    I wish I could believe that we’ll learn something from all this, that we’ll put some real regulations in place that will keep this sort of thing from happening again, but I suspect that we’ll be hearing this story again in, oh, about twenty years, right around the time I’m looking to retire, because we don’t learn long-term lessons.

  6. 6
    r€nato says:

    McCain is flailing about because for decades he’s been one of the people who helped create this mess by allowing Wall Street to do whatever the fuck it wants.

    The Republican approach to financial markets is to let them do whatever the fuck they want, and then when they fuck things up we get to bail them out.

    The Democratic approach is sensible regulation to prevent these kinds of fiascoes in the first place.

    How many fucking times will people fall for that ‘fiscal conservative’ bullshit? It’s a fact that the biggest spending happens on the GOP’s watch.

  7. 7
    jibeaux says:

    I kinda like the seesaw between anarchastic laissez faire capitalism and the subsequent socialism of nationalized assets…….wheee!!!……it’s a WAY wilder ride than responsible regulation helping to prevent badly managed investments…..

  8. 8

    I think it’s time to turn to the east, get on our knees and kiss the feet of our new Chinese masters, who will be financing all these bail outs.

    “Xie xie Hu Jintao!” (Thanks Hu Jintao)

  9. 9
    PeakVT says:

    Well, we learned all this back in the 80s with Reagan, yet come 2000 and 2004 people voted for Bush.

    And at this rate the War on Wall Street Greed will cost more than the War in Iraq.

    “We Have Met The Enemy and He Is Us”

  10. 10
    Dreggas says:

    r€nato Says:

    McCain is flailing about because for decades he’s been one of the people who helped create this mess by allowing Wall Street to do whatever the fuck it wants.

    and right now he is trying to blame Obama too..

  11. 11
    NCProsecutor says:

    John, why do you hate America?

  12. 12
    Svensker says:

    But Republicans are fiscal conservatives! None of this is really happening!

    Oh wait, Rush is explaining that it’s all because of liberals feeling guilty about loaning money to poor black people. So it IS happening, but it’s the LIEBRULS fault. Boo, Dems! Yay, Repubs!

    We are really screwed here, ain’t we folks?

  13. 13
    Zach says:

    To be fair, the stock prices of Fanny/Freddy, AIG, and Bear all tanked, so people who bought into their risks did suffer.

    I’d rather the government own a bunch of mortgages under one umbrella and deal with that (with the possibility to hold instead of putting on the market temporarily to help stabilize prices) than leave them in the hands of failing brokers racing to liquidate at all costs.

    Any public rescue package won’t pass Congress unless it’s coupled with the strongest laws possible (that are somewhat compatible with existing contracts) limiting executive compensation for rescued brokers.

    You’re absolutely right that the ever more simplified “less regulation = better than” that’s been the mantra of poorly informed Republican politicians (and an unfortunate number of Democrats) has suffered a terminal blow, though. No better evidence for that than the difficulties McCain’s had in recalibrating his economic message this week.

  14. 14
    Bill says:

    Here’s the take away stump line: “It’s supposed to be a free market, not a free-for-all.”

  15. 15
    mellowjohn says:

    next i’d like to invest in the theatrical production firm of bialystock and blum.

  16. 16
    Zifnab says:

    In other words, folks spent years making billions upon billions of dollars on risky transactions, more money on the stock of companies that was artificially high based on those transactions, more money bundling all those transactions into more transactions, and made a killing, and when it turns out the whole thing is a big pile of shit, you and I get the god damned bill.

    It was too late to dodge the bill years ago. Did you invest in a money market account? Did you get an ARM loan? Did you sell your house at above market value? Did your 401(k) pick up dividends from any of the currently failing companies?

    If so, then you’ve been receiving Wall Street funny-money. Those dollars credited to your account? Odds are, they’re the profits of the funds holding the assets invested in the derivatives that make up the $45 trillion shadow economy.

    That’s $45 trillion which our investment bankers and mortgage lenders insisted was out there and simply isn’t. The banks have been printing their own money and handing it out. It’s like Enron, but Countrywide (or, across the country, if you prefer).

    The government now gets to choose whether it wants to respect the $45 trillion in assets that our financial markets conjured up onto their books, or whether they deny it exists and turn the money in your market accounts, the value in your mutual funds, and the equity in your homes into the dust from which it came. It’s a devil’s choice, but it’s all we’re left with.

    So don’t blame the government for “bail-outs”. The opportunity to prevent a massive bail-out floundered and failed back in 2005, when the DOW was stretching for 14,000 and a card board box on Staten Island was selling for $100k.

    That said, when someone comes back and tells you how our country can’t afford departments of universal health care or affordable housing or baby bonds and college savings credits – point to AIG, Freddie / Fannie, and Bear Sterns. Can’t afford them? We already bought them!

  17. 17
    NonyNony says:

    I do not ever want to hear another damned word about the free market. I don’t want to hear another thing about letting the market regulate itself. I don’t want to hear about the free flow of capital. I don’t want to hear about government getting out of our lives.

    And John takes another step to the left… ;)

    On a related note, I’m really hoping that this incident goes out as a wake-up call to economic “moderates” in the Republican party that the hard core right turn that the GOP has taken over the last 30 years is not really in their benefit. An economic “Schaivo moment” if you will. Decent regulation and high levels of transparency are actually the backbone of a modern economy, and we’re going to continue our spiral into backwater irrelevance if we don’t get our asses in gear and figure this out. (Listen to Warren Buffet speak on this stuff sometime – there’s a reason why he gave up on Republican pols a while back and why he was screaming about this stuff being a problem years before it started showing up in the markets.)

    Small business owners especially should be up in arms about this utter mismanagement that the GOP’s bankrupt ideology-driven policies and pronouncements for the last 30 years have driven us to. This didn’t just happen in the last 8 years – and despite what the “bu..bu..Clinton!” crowd wants people to believe it didn’t just happen in the last 16 years either – this is the end result of policies put into place and actively pushed for by far-right economic Republican pols and their billionaire allies for the last 30 years.

  18. 18
    Napoleon says:

    “what we have in this country is socialism for the rich and free enterprise for the poor.” Martin Luther King

    I am willing to bet the right, led by the Washington Post, will use the increased debt the US has just took on for this bail out as a further reason that Social Security has to be cut (even though the country today is much more wealthy then it was in 1932).

  19. 19

    Just my opinion (and an apparently unpopular one here at that), but I don’t think most of those so-called “free-market” people were ever really anything of the sort. They were corporatists, not free-marketeers. Though they may sing the praises of free-markets when it suits their needs, they have no desire to accept the punishments that come from being an idiot on the free-market.

    I think this bailout (and the others) are awful, and there’s a good chance that at best they’ll just delay and compound the mess we’re in right now. I think the government in this case should let the market work, even if it is painful. But I’m also under no delusions about the purity of the motives of most of my fellow so-called free marketeers. Most of them are just shills for corporatism.

    ~Jon

  20. 20
    Scott H says:

    You’re getting a peek at a small part of the rather sophisticated system of pipelining taxpayer cash into private hands. This isn’t trickle down; it is vacuum up. And it isn’t capitalism, or anything like capitalism.

  21. 21
    Xenos says:

    Just my opinion (and an apparently unpopular one here at that), but I don’t think most of those so-called “free-market” people were ever really anything of the sort. They were corporatists, not free-marketeers. Though they may sing the praises of free-markets when it suits their needs, they have no desire to accept the punishments that come from being an idiot on the free-market.

    This is absolutely true about the Libertarian/Freemarketarian thinks tanks like Olin Foundation, Cato, Manhattan Institute, and so on. All just a pseudo-academic sham to put, er, lipstick on a pig of shameless corporate greed, nepotism, and cronyism.

  22. 22
    r€nato says:

    it’s crony capitalism. What else should one expect from the Bush regime?

  23. 23
    bootlegger says:

    They were corporatists, not free-marketeers.

    Not to be obtuse, but what is the difference? Seriously.

    In the “free” market is one entity acquires most of the capital they can then manipulate that “free” market. This is something free marketers don’t get, a Free Market is impossible! Someone will always take advantage of it and when they do their manipulations make the market not-free. If we regulate them the market is not-free. If the government takes their hands off, the market makes itself not free, it the government controls it, it isn’t free.

    Simple.

  24. 24

    […] John Cole, as usual, says it better.   […]

  25. 25
    Beth in VA says:

    I love the assholes tag on this.

  26. 26
    Rick Taylor says:

    They say a liberal is a conservative who has been mugged. I guess this is the same thing in reverse.

    I do not ever want to hear another damned word about the free market. I don’t want to hear another thing about letting the market regulate itself. I don’t want to hear about the free flow of capital. I don’t want to hear about government getting out of our lives.

    Yup.

    Yup. Yup. Yup. Yup. Yup.

    Also, I don’t want to hear about “welfare queens,” I don’t want to hear about little boys who game the system getting insurance they’re not supposed to, I don’t want to here weeping and gnashing of teeth about how horrible it would be for the government to provide health care for people because the free market is always perfect, and I definitely do not want to hear anymore snide comments about how we liberals always want to spend other peoples’ money.


    Number of attempts required before word press accepted this comment: three.

  27. 27
    montysano says:

    Paulson is on the teevee right now talking about the “benefits to the taxpayer” of this plan. Yeah…. he really said the word “benefits”.

    Oh wait, Rush is explaining that it’s all because of liberals feeling guilty about loaning money to poor black people. So it IS happening, but it’s the LIEBRULS fault. Boo, Dems! Yay, Repubs!

    Lucifer is building a special place for Rush, complete with fat bottles of Oxycontin hanging just out of reach, naked Dominican teens with locked chastity belts, and Olbermann playing 24/7/365.

  28. 28
    b. hussein canuckistani says:

    Not one punishment for the people who did this.

    I hate to say it, John, but the people who did this is you, and everyone else who thought it would be a good idea to hand the henhouse over to the foxes in 2000 and 2004. Now there are no chickens or eggs and you have to clean up the bones and eggshells. I’d say the people responsible are being punished plenty.

  29. 29
    Elvis Elvisberg says:

    I wish I could believe that we’ll learn something from all this,

    What I’ve learned from the past 8 years is that we never learn anything.

    I thought we learned from Vietnam and Watergate that lying (about war) and spying (on Americans) are bad things that backfire, so they wouldn’t happen again.

    Actually, we learned that governments try to do bad things, and we need to watch them.

    I’d be a conservative (in wholehearted agreement with this post, BTW), but there is no conservative party in this country, so I’m a Democrat.

  30. 30
    SGEW says:

    They say a liberal is a conservative who has been mugged.

    And a conservative is a liberal who has never been broke. Or arrested.

  31. 31
    LiberalTarian says:

    You do have to wonder, where is my bailout?

    If we don’t have decent paying jobs for the middle class, who is going to provide the tax base for these bailouts?

    We are going to spend trillions fixing what the rich screwed up, and when we need help, middle-class taxpayers, it’s off to a tent city in an abandoned parking lot because the government is tapped out helping people who have pocketed most of the wealth of the country’s natural resources.

    Arrrr. Even worse, the DoJ has decided that breaking laws at the top of the tax chain is not really criminal behavior. Contrast that to your local pot operation, who has their house and assets confiscated by the feds.

    That’s some system the Republicans (and DINOs) have set up.

  32. 32
    wasabi gasp says:

    Why do you hate Michael D’s 401k?

  33. 33

    That said, when someone comes back and tells you how our country can’t afford departments of universal health care or affordable housing or baby bonds and college savings credits – point to AIG, Freddie / Fannie, and Bear Sterns. Can’t afford them? We already bought them!

    And we haven’t finished paying for them either.

    Cole was right. Better brush up those gardening skills and grow your own food. They may be essentials skills here in a year or two.

  34. 34
    Oliver's Neck says:

    And it isn’t capitalism, or anything like capitalism.

    Except in all the ways that it is exactly capitalism. Capitalism necessarily and definitionally is a system of social relations wherein wealth is generated by the laborers and taken by the capitalists. During the days of production-based capitalism, this played out in the fields and factories. We are currently witnessing how the dynamic works in today’s financial-based capitalism. It’s still the same thing, though.

  35. 35
    Rick Taylor says:

    Just my opinion (and an apparently unpopular one here at that), but I don’t think most of those so-called “free-market” people were ever really anything of the sort. They were corporatists, not free-marketeers. Though they may sing the praises of free-markets when it suits their needs, they have no desire to accept the punishments that come from being an idiot on the free-market.

    It doesn’t matter what they were. An economic system can’t depend upon the purity and virtue of those operating in it; that was Adam Smith’s point. The point is, we keep getting the same codswallop about how regulation is the problem and how much better things will be when economic actors have complete freedom, and we keep getting blind sided by the results over and over and over again, and we never learn. The great depressions should have established this once and for all, and it did for a while, but people keep forgetting. Enron and the the California energy crises should have been a wake up call.

  36. 36
    littlesky says:

    Hmmm, I do believe Naomi Klein is on to something. I know I’m shocked by what has happened and by what they’re proposing.

  37. 37

    Why would there be punishments? This is the way the system is supposed to work–just another way to transfer wealth from those who haven’t to those who have.

    As Jesus said (ironically, I believe, despite what centuries of imperial exegesis try to tell us):

    “For to everyone who has, more shall be given, and he will have an abundance; but from the one who does not have, even what he does have shall be taken away.” (Matthew 25:29)

  38. 38
    RSA says:

    I am tired of other people getting rich being irresponsible and then being told I have to pay to clean it up. I didn’t read one punitive aspect of this new plan. Not one punishment for the people who did this.

    Some people never stop pointing fingers. Why can’t you let our masters totally fuck us over in peace?

  39. 39
    Napoleon says:

    This is an idea I e-mailed to Paul Krugman, and if he does nothing with it maybe I will e-mail it to someone else, but with the right for years falsely trying to tar Democrats plans as being socialist (when they are anything but), I would love to see what a comparable move (as in comparative to the contemporary GNP) by, say, FDR or Truman or Kennedy would have looked like. Would FDR have to have nationalized US Steel, Republic Steel and all of “little steel”(Youngstown Sheet and Tube, et. al.) for a comparable impact of overnight moving a segment of private enterprise into the public column? GM, Ford, Chrysler, Nash and Studebaker? NY Central, Pennsylvania Railroad, Baltimore and Ohio and Union Pacific Railroad?

    Can you imagine how we would still be hearing about it today from Gingrich, Adam Putman, Rush Limbaugh, T. Boone Pickens and all the other wakers on the right if in 1940 FDR had made one of the above moves?

  40. 40
    wingnuts to iraq says:

    its crony communism

  41. 41
    Bootlegger says:

    Some people never stop pointing fingers. Why can’t you let our masters totally fuck us over in peace?

    Ok, but a little lube, kiss on the forehead, and a thank you would go a long way.

  42. 42
    cyntax says:

    Jonathan Goff Says:

    Just my opinion (and an apparently unpopular one here at that), but I don’t think most of those so-called “free-market” people were ever really anything of the sort. They were corporatists, not free-marketeers.

    Well, while I think your distinction between free-marketeers and corporatists is a vaild one, it does beg at least one question.

    What would a truly free market look like and would it be a good thing at this point? To steal an analogy I read in the last couple days (but can’t recall where), you wouldn’t want to play football without referees so why should we have markets without rules?

  43. 43
    Caidence (fmr. Chris) says:

    Ooh! ooh! While were on this mode!

    I don’t EVER want to hear from right-leaning douchebags that left-leaning people are against free enterprise. Since when people from blue states start disliking retiring comfortably, sipping their prissy mochachinos and then going down to the food shelter to make them feel better about themselves?

    One of my absolute hatreds is how I and people similar to myself would speak about how regulation has a place in making sure the market doesn’t break its damn self. Republicans would call our type “elite”, “academic”, “know-it-all”.

    Fuck you people back to your shithole houses on wheels. I went to school — the whole 10 yards — for systems design, you pricks. You either listen to me when I speak, you provide more or better information than me, or you shut the fuck up. I am authoritative until proven otherwise.

    Why can’t blue staters say that? “I AM AUTHORITATIVE UNTIL PROVEN OTHERWISE”. So damn simple.

    alright I’ll shut up now.

  44. 44
    montysano says:

    I’m going to wander off into tinfoil hat land for a moment.

    Did the financial events of the last two weeks just happen to randomly occur at this particular point in history? Or was it an inevitable event that had to happen sometime, but the timing was controlled to some degree? Because there is one thing we can be sure of: whoever takes office 1/20/09 will be handed the broken shell of a formerly great nation. Whoever that is will raise taxes; make no mistake about that. And if that person is Obama, then the last 20+ years will cease to exist and the Rovian ratfuckers will immediately start a “What’s the problem, dude? Too tough for you?” sniggering campaign. Is Grover Norquist rejoicing today that the dream is still alive?

    Or is it just monumental incompetence? Living in the Rove era has warped my radar.

  45. 45
    Rick Taylor says:

    None of this has passed yet; I know it’s unlikely, but perhaps Democrats could stand up and add demand something in return for this enormous amount of capital. Maybe it’s time to discuss raising tax rates and closing tax loopholes for the rich? They’re getting the benefits of a safety net for Wall Street, shouldn’t they pay for it? Or how about an independent body with teeth that would regulate the markets? Or, how many people could we get health insurance for for all this money? If we can afford one, surely we can afford the other.

    And by the way, whatever amount of money they’re talking about now to save Wall Street, you can be nearly certain in the end it will be much more; it almost always works that way.

  46. 46
    Dennis - SGMM says:

    As long as no one is held to account and the non-regulatory climate that allowed this to happen is unchanged then the system has worked exactly the way they wanted it to work.

    Now watch as the captains of finance vote themselves millions in performance bonuses for getting rid of the bad assets.

  47. 47
    Tom G says:

    I do not ever want to hear another damned word about the free market. I don’t want to hear another thing about letting the market regulate itself. I don’t want to hear about the free flow of capital. I don’t want to hear about government getting out of our lives

    Okay, this is what bugs those of us libertarian / classic liberal sympathizers who do NOT hump the Republicans.
    This country has never KNOWN a really free market. What you are looking at is one of the biggest, long-term scams ever perpetrated on the public.
    In a free market, we never would have had Fannie and Freddie. We might have a gold standard. The Federal Reserve would not exist. The federal government would never have regulated a thing FROM THE START. Insurance would have been wholly private (no, NOT “privatized” – that’s another distortion of language).
    You guys ought to read what the Austrians (economic school), and LRC.com and Ron Paul have been saying. They knew it was a matter of “when”, not “if”.
    For a long time, large corporations and banking institutions have had very little incentive to be cautious. And when the Feds encourage risky behavior for years, on both the consumer’s part AND the financial firms, you get the set-up for this kind of bubble burst.

  48. 48
    Marshall says:

    I really enjoyed Peter Heather’s book on the collapse of the Roman empire. He describes clearly how a major contributing factor was that the Emperors in the West ran out of money to pay their troops, borrowed all they could, and then lost it all at the Battle of Cape Bon.

    It’s not pretty when Empire’s run out of money.

  49. 49
    ninerdave says:

    None of it. From superfunds to super-bailouts, I am tired of other people getting rich being irresponsible and then being told I have to pay to clean it up. I didn’t read one punitive aspect of this new plan. Not one punishment for the people who did this.

    In fairness, we don’t know what the plan will be yet. Of course, between the GOP and Blue Dogs, I doubt the thieves have to worry too much.

  50. 50

    A friend of mine put it this way:

    It is no exaggeration to say that if the present GOP administration had refused to toss its laissez-faire free market ideology aside and spend whatever it takes to shore up the financial system, we would have had a global financial collapse and ensuing global depression on the scale of the 1930s — or worse — and it would have begun much faster.

    The public, the press, and I dare say both presidential candidates aren’t really aware of how close to that precipice we have been — and still remain, despite the extraordinary market relief efforts of the last couple of days. Fortunately, this time around Herbert Hoover is adopting FDR’s interventionist powers and approach right away, preemptively, rather than sticking with the hands-off ideology for another four years while watching the economy crater the way he did the last time around.

    But he’s still Herbert Hoover, and his party is still Hoover’s party. The fact that it ever got this bad, and that the administration with its back to the wall was willing to intervene so drastically, does demonstrate the invalidity of their unregulated-markets ideology ab initio.

    I think we were in a lot more danger than any of us know and all of us would have suffered. It violates my sense of justice in every way possible, but what the government did had to be done, sadly.

  51. 51
    Caidence (fmr. Chris) says:

    What would a truly free market look like and would it be a good thing at this point? To steal an analogy I read in the last couple days (but can’t recall where), you wouldn’t want to play football without referees so why should we have markets without rules?

    This is much closer to the case. Markets should be as free as we can make them, but there are some things that are amazingly unreasonable. One of them is implementing contracts like the Credit Deriv. Swaps that started this mess without all of the underlying facts. Other things are like allowing banks to back high-risk endeavors when the purpose of a bank is to be a low-risk stronghold of money. You can’t be low-risk and high-risk at the same time.

    Reasonable regulations are rules that enforce sanity and balance. Unreasonable regulations are rules enforced out of liberal guilt and this so-called “equality” thing, which I have yet to see evidence of.

  52. 52
    Bootlegger says:

    What would a truly free market look like and would it be a good thing at this point?

    There is no such thing as a “truly free” market. Markets left to their own devices will eventually wind up under the control of a few (or one) producers who will use pricing and supply to manipulate the “free” market and drive off and/or keep out competitors. The market itself will eventually make itself not-free.

    The “free” market is a myth. Ayn Rand wrote fiction. Capitalism is a theory. We either control the greedy or the greedy control us. These are the only options.

  53. 53
    tBone says:

    Why can’t blue staters say that? “I AM AUTHORITATIVE UNTIL PROVEN OTHERWISE”. So damn simple.

    I prefer the original RESPECT MY AUTHORI-TAH!

  54. 54
    SGEW says:

    We either control the greedy or the greedy control us. These are the only options.

    I can haz populist revolution?

  55. 55
    SGEW says:

    We either control the greedy or the greedy control us. These are the only options.

    I can haz populist revolution now?

  56. 56
    Dreggas says:

    I think we were in a lot more danger than any of us know and all of us would have suffered. It violates my sense of justice in every way possible, but what the government did had to be done, sadly.

    Were in? AIG chewed through a third of that 85 billion loan in one day. We’re not out of the woods yet and anything done now is just to try and help the Republicans limp over the finish line in November. If the American people realized that they’d be throwing the bums out literally and physically. We are standing on a cliff with one foot on a banana peel.

  57. 57
    SGEW says:

    Cursed Word Press!

  58. 58
    Va Highlander says:

    bootlegger Says:

    They were corporatists, not free-marketeers.

    Not to be obtuse, but what is the difference? Seriously.

    Let’s allow Il Duce to speak to this one:

    Fascism should more appropriately be called Corporatism because it is a merger of State and corporate power.
    – Benito Mussolini

    Whether or not you believe a free market is possible in practice, the discussion still remains within the realm of economics. Corporatism is a political theory, a question of governance.
    The recent bailouts, even if necessary under the circumstances, simply demonstrate the unquestioned principle that what’s good for Wall Street is good for the nation and vice versa. This is where the proponents of free-market economics have led us.

  59. 59
  60. 60
    dancinfool says:

    We are all living on Fantasy Island and there’s some dwarf pointing up to the sky and shouting, “de PLAN! de PLAN!”

  61. 61
    sparky says:

    oooh. class warfare! this the recruiting station?

    this country is like a binge drinker choking on its own vomit and then getting mad when the bartender tries to take the bottle away.

  62. 62
    The Moar You Know says:

    Just my opinion (and an apparently unpopular one here at that), but I don’t think most of those so-called “free-market” people were ever really anything of the sort. They were corporatists, not free-marketeers.

    Not to be disrespectful, but this smacks of the same bullshit that gives us “George Bush was really a liberal all along” or “Communism’s never really been tried in the form it was concieved in”. Crap. Your idea failed. Get over it.

    What we’ve got here today is a failure of deregulation and an abject, miserable failure of the free-market model, plain and simple.

    Regulation is good. It keeps the moneymen from doing stupid shit that wrecks our lives, and keeps the little guy from getting fucked over.

  63. 63
    sparky says:

    oh yeah–while it may be necessary for US to have bailed THEM out, some real anger, and some results along the lines of “never again” would be productive, methinks.
    at least until the next generation disremembers the past and prefers to hornswaggle itself.

  64. 64
    Napoleon says:

    Modern Hooverville’s

    I believe the term is “Bush Cities”

  65. 65
    Punchy says:

    Bush gunna drunk-sailor spend until he’s outtie office. It keeps peeps from blamin his ass, keeps McCant in the running for the DubHizzy, and fucks the next guy with a splintered broomstick.

    No amount of scratch gunna be too much if it keeps the markets band-aided together until November.

    Realize this: Paulson could have asked for TRILLIONS, and gotten it. Really, and number, and Congress too scared to say no.

  66. 66
    Punchy says:

    Bush gunna drunk-sailor spend until he’s outtie office. It keeps peeps from blamin his ass, keeps McCant in the running for the DubHizzy, and fucks the next guy with a splintered broomstick.

    No amount of scratch gunna be too much if it keeps the markets band-aided together until November.

    Realize this: Paulson could have asked for TRILLIONS, and gotten it. Really, and number, and Congress too scared to say no.

  67. 67

    I couldn’t agree with you more, Dregges. I have been writing about the dangers for months, including the completely overlooked danger of peak oil/peak commodities/peak food that is going to affect us in the next Presidential term.

    Culture choc – Oil: Enjoy it while you can…

  68. 68
    Punchy says:

    Bush gunna drunk-sailor spend until he’s outtie office. It keeps peeps from blamin his ass, keeps McCant in the running for the DubHizzy, and fucks the next guy with a splintered broomstick.

    No amount of scratch gunna be too much if it keeps the markets band-aided together until November.

    Realize this: Paulson could have asked for TRILLIONS, and gotten it. Really, and number, and Congress too scared to say no.

  69. 69
    AkaDad says:

    Is Conservative the new Liberal?

  70. 70
    Dennis - SGMM says:

    Realize this: Paulson could have asked for TRILLIONS, and gotten it. Really, and number, and Congress too scared to say no.

    Just heard a finance boffin on NPR talking about “the plan.” It’s only going to cost one measly trillion dollars (so far) to buy up the bad assets. What a relief. For a minute there I thought that we were talking real money.

  71. 71
    OriGuy says:

    McCain’s latest Spanish Inquisition gave me an insight. These guys aren’t Fascists, they’re Falangists. &#161Viva la Brigada Ronald Reagan!

  72. 72
    Napoleon says:

    These guys aren’t Fascists, they’re Falangists.

    You are actually closer to the truth then most people here whould realize. About a year and a half ago I read a few books on the Spanish Civil War to see if it had any relevence to the current political climate in the US and my conclusion was that in a lot of ways Spanish society on the eve of their civil war is like todays USA.

  73. 73
    Napoleon says:

    These guys aren’t Fascists, they’re Falangists.

    You are actually closer to the truth then most people here would realize. About a year and a half ago I read a few books on the Spanish Civil War to see if it had any relevence to the current political climate in the US and my conclusion was that in a lot of ways Spanish society on the eve of their civil war is like todays USA.

  74. 74
    montysano says:

    oh yeah—while it may be necessary for US to have bailed THEM out, some real anger, and some results along the lines of “never again” would be productive, methinks.

    Dream on, “my friend”: my wingnut co-workers think it’s even more imperative, given the events of the last couple of weeks, to elect McCain. Why: “Obama will raise our taxes”. And of course, Rush’s “This is all because the Dems wanted brown people to have houses” meme is catching on. Maybe all those brown-people-houses add up to $60T, but somehow that math doesn’t seeem to work.

    I mean….. jeezus……. words just fail. I’m officially dismayed.

  75. 75
    Punchy says:

    i hit “submit” one time. crap software.

  76. 76
    liberal says:

    Tom G wrote,

    In a free market, we never would have had Fannie and Freddie. We might have a gold standard. The Federal Reserve would not exist. The federal government would never have regulated a thing FROM THE START. Insurance would have been wholly private (no, NOT “privatized” – that’s another distortion of language).

    It ain’t a free market unless the government stops handing money to landowners and other parasitic rent collectors ([1], [2]).

    Anyone who says otherwise is a slavery lovin’, Royal libertarian hack.

  77. 77
    Zifnab says:

    Just heard a finance boffin on NPR talking about “the plan.” It’s only going to cost one measly trillion dollars (so far) to buy up the bad assets. What a relief. For a minute there I thought that we were talking real money.

    The fake money floating around the shadow economy that got set up around bullshit mortgage investment crap came to around $45 trillion. If we get out for a few percent of that, I would definitely call that a relief.

  78. 78
    Tom65 says:

    The upside of this is that the free-market conservatives forever give up their right to bitch about how much education or healthcare costs.

  79. 79
    Darkness says:

    I didn’t read one punitive aspect of this new plan. Not one punishment for the people who did this.

    They are kindly leaving that as an exercise for the citizenry, who could use the chance to get outside anyway. I got my pitchfork… who’s got a light for these torches?

  80. 80
    Robert Johnston says:

    In theory something like this could be a big money maker for the government. One of the big problems in the mortgage crisis has been that it’s so difficult to renegotiate mortgages because mortgage backed securities have so chopped up ownership interests, so a lot of of mortgages that could be profitably renegotiated at 75-80 cents on the dollar are being foreclosed instead, resulting in returns of perhaps 50 cents on the dollar. So, if the government buys up the mortgages at 65 cents on the dollar and renegotiates them to fixed rate mortgages at 75 cents on the dollar, everyone wins. The government profits, the mortgage holders get more than they would in foreclosure, and many fewer homeowners are subject to foreclosure.

    While the moneymaking potential is most obvious with the government buying up mortgages, it works for other illiquid assets of uncertain value that would otherwise be subject to firesales but for government takeover of the assets. So long as the government pays somewhere between the firesale price and the true value of the assets, everyone wins.

  81. 81
    montysano says:

    Tom65 Says:

    The upside of this is that the free-market conservatives forever give up their right to bitch about how much education or healthcare costs.

    Whaaaaaa? McCain will resume bitching about it by tomorrow; Hannity will never lose a stride.

    These crazy kids.

  82. 82

    I think it’s time to turn to the east, get on our knees and kiss the feet of our new Chinese masters, who will be financing all these bail outs.

    I, for one, welcome our new Chinese overlords.

    http://www.flickr.com/photos/g.....ol-cn_girl

  83. 83
    bootlegger says:

    Va Highlander Says:

    Corporatism=Fascism, fine. But my point is that this is where our hypothetical “free” markets always end up. No market ever stays free, in the end either the producers manipulate it or the consumers regulate it.

  84. 84
    chopper says:

    i am changing my name to Chrysler
    i am going down to Washington D.C.
    i will tell some power broker
    what they did for Iacocca
    will be perfectly acceptable to me
    i am changing my name to Chrysler
    i am headed for that great receiving line
    so when they hand a million grand out
    i’ll be standing with my hand out
    yessir, I’ll get mine…

  85. 85
    Va Highlander says:

    Corporatism=Fascism, fine. But my point is that this is where our hypothetical “free” markets always end up. No market ever stays free, in the end either the producers manipulate it or the consumers regulate it.

    I’m not contesting your point. I think the question is more who or what controls the market and for the benefit of whom. As it stands, it doesn’t look like it’s meant to benefit the bulk of the electorate.

  86. 86
    Dave says:

    The problem, I think, is the illusory goal of market efficiency for its own sake. WHY THE HELL DO WE WANT EFFICIENT MARKETS when they do not guarantee stability or growth?! I hope those free market nuts will acknowlege that the events of the past few days are efficient in that they show that no matter how big a firm irresponsible lending will bite you in the a**, and that market efficiency is a ridiculous goal. Its like saying that I want my car to run efficiently but I don’t care if it moves. What is the point of having the engine run smoothly if the car lacks tires?

    What we need are safe fair and humane markets.

    I really hope those on the left show that the two biggest problems we have economically are:

    1) Corporate Personhood

    2) The goal of ‘market efficiency’

  87. 87
    Surly Duff says:

    R Johnston – “In theory something like this could be a big money maker for the government. One of the big problems in the mortgage crisis has been that it’s so difficult to renegotiate mortgages because mortgage backed securities have so chopped up ownership interests, so a lot of of mortgages that could be profitably renegotiated at 75-80 cents on the dollar are being foreclosed instead, resulting in returns of perhaps 50 cents on the dollar. So, if the government buys up the mortgages at 65 cents on the dollar and renegotiates them to fixed rate mortgages at 75 cents on the dollar, everyone wins. The government profits, the mortgage holders get more than they would in foreclosure, and many fewer homeowners are subject to foreclosure.”

    True, but since most of this concerns mortgage-backed securities, which are packaged groups of mortgages (soemtimes many times over), some of which are derived from now failed banks, what is the actual chance that these mortgages are going to renegotiated and a profit will result? We are talking about 1 in every 40 houses in the U.S. is being foreclosed per month, and there are currently over 2 million foreclosed houses on the market.

  88. 88
    Seanly says:

    So, if the government buys up the mortgages at 65 cents on the dollar and renegotiates them to fixed rate mortgages at 75 cents on the dollar, everyone wins.

    My wife & I are paying our mortgage, but we would gladly only pay only 75 cents on the dollar. Would save me a car a good chunk each month. Should I stop paying my mortgage now?

    It seems like we are rewarding all the people who fucked up. The corporations & their officers who made bad loans, invested in bad loans, insured bad loans and the people who went into bad loans. What happens to us SOBs who got a mortgage we could afford, but are now very much upside down thanks to reduced market value.

  89. 89

    “Work is for those who don’t know how to plunder” – Savannah Georgia pirate T-shirt

  90. 90

    im in ur federal rezervz, stealin ur monies!

  91. 91
    gopher2b says:

    It seems like we are rewarding all the people who fucked up. The corporations & their officers who made bad loans, invested in bad loans, insured bad loans and the people who went into bad loans. What

    That’s exactly what this is. This is not about saving the economy. This is about saving a business model: a business model that is based almost entirely on making money by borrowing your capital from someone else.

    The idea that if you let these banks fail, you would destroy the U.S. economy is ridiculous. Look at Chase, Bank of America, Warren Buffet and Berkshire…there are plently of major entities that would fill the void and provide “enough” credit to grease the wheels again.

  92. 92
    w vincentz says:

    Wowsers! I just read through this thread. it seems that many are unhappy. Boo hoo…how unfair!
    OK, now I’ll give you Earthlings my take on this “crisis”.
    There isn’t one.
    Let me back up a moment and I’ll explain.
    Back in 2000, “Lights over Arizona” made headlines. John McCain even reported that he saw them as UFO’s on Fox News.
    Look it up.
    What he didn’t see was when my craft landed and I disembarked so that I could report on my observations to my supreme commander on the mother ship.
    Since my landing, I’ve noticed how eager humans are to become anxious and worried. Sometimes their concern is about getting caught for greedy motives, or victimized by those that exert same on them.
    So silly you are, Earthlings.
    On my home planet, we just don’t do things that way. We carry enough “joy” on our physical beings to use as needed, and offer to those that have run out.
    Earthlings might call these “happy pills”, but I won’t get into that now.
    Suffice to say that I’ve been handing out “happy pills” like crazy lately, both on Wall Street and in a place with huge white buildings that you call your capitol.
    All that effort has worked magic.
    You don’t have to thank me for all I’ve done. I can get more “happy pills” anytime they are required (though I’m not willing to discuss this either).
    Next thing some poster on Ballon Juice will probably want to know is how I shrunk the president.
    I’m not telling you that either.
    Just take some advice, Earthlings…don’t worry so much.
    You’ll get by. You even might feel better about things someday. Didn’t it take a bit of time. like from Oct 1929 to April 1932 for things to bottom out before?

  93. 93
    Delia says:

    Meanwhile, The Wall Street Journal is hurt and dismayed that McCrazy is saying mean things about Christopher Cox as a way to scapegoat himself out of the financial mess. Keep it up, Johnny-boy. Maybe you can succeed in losing the Masters of the Universe wing of the rethugs before October ends.

  94. 94
    Dave Shepherd says:

    And so say we all John.

    Brad @ Sadly No has suggested bringing back the stocks, I’m thinking something more along the lines of Bastille Day. No point breaking out the guillotine though, no sooner does it come down than their soul downloads into another body. Bastards.

  95. 95
    jTh says:

    I do not ever want to hear another damned word about the free market. I don’t want to hear another thing about letting the market regulate itself. I don’t want to hear about the free flow of capital. I don’t want to hear about government getting out of our lives.

    Yeah, we have to stamp out this idea that the “liberty” promoted by the founding fathers intended a license for unbridled greed.

    I brushed up against the Libertarian party a few years ago, and ultimately rejected them for the same faulty basis as the Republicans.

    So welcome to a progressive worldview. “Fair trade,” not “free trade,” and the imperative of regulation that knows the difference.

  96. 96

    From the 2006 documentary “Oil, Smoke and Mirrors”

    Colin Campbell: “Somehow they’re going to have to wipe out just mountains of Capital”

    Chris Sanders: “And this is where Peak Oil comes in because the implication of Peak Oil is that oil prices are going to become more volatile, and that the average price of oil is going to remain structurally higher than it has been in decades. And if that happens then the economic value securing the American debt structure has got to be valued downwards by some factor…let’s call it Factor X. And Factor X is the thing that threatens the United States most.”

  97. 97
    Oeasterd says:

    For eveything in life it has its price (like your favorite lobbyist in your pocket):

    AIG Bailout………………..$23,108 per taxpayer
    Bear – Sterns Bailout ……..$9,574 per taxpayer
    Freddie Mac Bailout ……..$33,012 per taxpayer
    Fanny Mae Bailout ………$33,012 per taxpayer

    Bush-Gramm-McCain-Paulson mess bailout………….$165,061 per taxpayer

    ………Progressive candiadate who says “Bush-McCain-Gramm-Reagon “Trickle-Down” ecomomics and Gramm-McCain style de-regulation is now dispproven by real world example”……………

    …….PRICELESS

    Sources:
    http://www.irs.gov
    http://monkeyfister.blogspot.com
    http://connerforus.com/tax%20prop%202008.htm

  98. 98
    NonyNony says:

    This country has never KNOWN a really free market.

    THAT’S BECAUSE “REALLY” FREE MARKETS DO NOT EXIST EXCEPT AS AN ABSTRACT ECONOMIC MODEL!

    Get it through your heads – as soon as you have a government that is willing to use its authority to enforce contracts you no longer can have a market free of regulations – it becomes a question of how much regulation is acceptable, not whether there should be regulation at all or not.

    Only people who have been completely hoodwinked by the elite banker class actually buy into the notion that you can have this mythical “free market” in the real world. It’s Utopian cloud-cuckoo-land fantasy talk that respectable economists laughed at until about 30 years ago when they realized that they could get very, very rich by exploiting the gullible rubes with this nonsense.

    All of this talk about “we’ve never had truly free markets” sounds incredibly like the line I heard from raging Communists when I was a college undergrad – “Communism hasn’t failed – it’s never really been tried! The Soviet Union wasn’t true Communism! China isn’t true Communism!” Blah, blah, blah. This is the real world, not an Econ textbook, and so “close enough” has to count for empirical results. We’ve tried “free markets” as close as we can get in the real world and they’ve failed us – it’s time to get back to moderate, sane regulations that allow for a level playing field and some guarantees that the moneyed classes can play their little financial games without screwing over the little guys who are just trying to live their lives, do their jobs, run their businesses, raise their families, and don’t give a damn about any of this.

    Sensible socialism served this country well for many years – even if we refused to call it that. It’s time for us to move back to it and realize that there’s a time and a place for this “every man for himself” shit and now is not it.

  99. 99
    shmo says:

    Isn’t

    ♥ The Bailout ♥

    pretty much the same as

    ♠ The Surge ♠ ?

    A temporary expedient to – by flooding in resources without restraint – protect the very parties who created the ‘crisis’ in the first place? As a former Felon-in-Chief once observed:

    I don’t give a shit what happens. I want you all to stonewall it, let them plead the Fifth Amendment, cover up or anything else, if it’ll save it, save this plan. That’s the whole point. We’re going to protect our people if we can.

  100. 100
    jcricket says:

    The main problem for Libertarians, including those who claim the whole “a real free market would be the shiznit, dude, trust me” is that old line I heard a lot in college:

    The difference between theory and practice, is that in theory, there is no difference

    First there are plenty of studies showing well regulated markets, which increase transparency, encourage investment, which creates wealth. So even on that level Libertarians are idiotically wrong. Compare the NASDAQ and NYSE to AMEX (or Zimbabwe).

    Fundamentally, Libertarians argue from the place of “regulation is all bad, unless you can show me otherwise”, which I think is no more of an axiom than “regulation is all good, unless you can prove otherwise”.

    Sure, there is an amount of government regulation where it stifles the market to a level that’s truly bad for everyone (save the government) – e.g. “You can only where white”, “You can only buy this type of cheese”. But we are so insanely far from that level it’s NOT EVEN FUCKING FUNNY.

    We can barely confirm that our food from China or our beef isn’t made of discarded plastic, that our cars don’t have tires that are about to explode, our bridges won’t collapse under us, the water we drink won’t contain sewage, our kids won’t go to a school coated in peeling lead-based-paint or asbestos insulation. Or now that the bank we are depositing our money in won’t be insolvent and our retirement won’t be instantly halved or worse because of massive lies of the public companies out there. All of this is due to the gutting of regulation, which allowed the bad behavior to go unchecked, under the guise of free marketism.

    It’s easy to argue for simple theories “Government should do nothing. Free markets regulate themselves”, but you know what? The world is a fucking complex place, and I’ve come to conclude that Libertarian economic ideology has no place in a serious discussion, any more than I would seriously consider the ideas of a phrenologist or eugenicist or “geologist” who believes the earth is 6,000 years old.

    I’ll say it: Regulation, when properly implemented, is a good thing for society, and for corporations

    Why we take Libertarians seriously on anything other than (perhaps) personal liberty issues (see Radley Balko) is beyond me.

  101. 101
    TenguPhule says:

    Not one punishment for the people who did this.

    Mandatory Castration/Ovary Removal.

    Followed by a Life Sentence Cleaning Superfunds sites.

    The floggings will continue until morale improves.

  102. 102
    slightly_peeved says:

    This country has never KNOWN a really free market.

    Another point, to go with the others above…

    Neither have any other first-world countries, because all of them – I’m pretty sure it’s every single one of them – doesn’t have the ideological block on regulation that the US does. And funnily enough, while we can debate the exact details, and certainly many economies over the world have many of their own problems, it’s the US’s economic castle that has turned out to be built on sand.

    Assuming you don’t have an ideological bias against government regulating things if regulation helps, the economies of places such as Ireland, Australia, New Zealand, and other first-world countries are looking pretty good about now. And as an upside, their healthcare is cheaper and when people get flooded, the government actually makes a decent effort at extracting them, rather than expecting them to grow gills or some shit.

    And it’s not like the US has to become the EU. There’s a happy medium there. But there’s no evidence whatsoever that turning away from regulation will benefit the US – there is only an ideology that yells it at the top of its voice.

  103. 103
    slightly_peeved says:

    Sensible socialism served this country well for many years – even if we refused to call it that.

    I completely agree with the rest of your comment, but I don’t think it is socialism. It’s standard democratic governance.

    If you’re the government, shit gets governed. Making sure people don’t die in the street because they can’t afford healthcare and making sure the money the government prints holds its value are just as core to a government’s role as making sure there are roads, laws, police, disaster relief and defense.

    If you accept that the government should defend against military attacks on the country’s infrastructure, why is itthen ‘socialism’ to suggest they defend against economic collapse?

  104. 104
    Rome Again says:

    I really enjoyed Peter Heather’s book on the collapse of the Roman empire. He describes clearly how a major contributing factor was that the Emperors in the West ran out of money to pay their troops, borrowed all they could, and then lost it all at the Battle of Cape Bon.

    It’s not pretty when Empire’s run out of money.

    No, it’s not. Thank you for recognizing what my name has meant all along. I knew this was coming. I didn’t know when, I just knew it was.

  105. 105
    Rome Again says:

    I think we were in a lot more danger than any of us know and all of us would have suffered. It violates my sense of justice in every way possible, but what the government did had to be done, sadly.

    Were in? AIG chewed through a third of that 85 billion loan in one day. We’re not out of the woods yet and anything done now is just to try and help the Republicans limp over the finish line in November. If the American people realized that they’d be throwing the bums out literally and physically. We are standing on a cliff with one foot on a banana peel.

    Thank you Dreggas, I was about to go off on that guy… well, actually I think I still will:

    What is this WERE that you speak of toujoursdan? We are still plugging a leaking hole in a huge damn that has cracks growing and splitting off into more cracks every day. This is not over by a long shot.

    These bailouts? They are rearranging deck chairs on a sinking ship. We’re going down by the head, and I’m sorry but, unless you have at least 20 billion dollars, the lifeboats aren’t for you. You’re on your own, swim for it. May God keep you safe. Oh, and watch out for the sharks!

  106. 106
    Rome Again says:

    We are all living on Fantasy Island and there’s some dwarf pointing up to the sky and shouting, “de PLAN! de PLAN!”

    No, I think you misheard him, he was actually saying “de PAIN! de PAIN!”

  107. 107
    Rome Again says:

    BTW, an interesting thought I had as a child is coming back to haunt me, the idea that investment brokers are called brokers because they make you go broke.

    I was right, and I wasn’t even old enough to know what I was talking about. Hmmmm!

  108. 108

    Moral hazard is for the little people.

  109. 109

    […] I don’t understand economy. But it’s clear something has gone very, very wrong in the States. Nassim Nicholas Taleb writes The Fourth Quadrant: A manp of the limits of statistics over at Edgo.org. Jaw-droppingly good article about risk, risk management and probabilities in statistics. Oh, and for your light entertainment, John Cole’s had enough… […]

  110. 110
    Lee says:

    Who says Republicans don’t like socialism? They’re just fine with socializing RISKS, as long as BENEFITS are privatized.

  111. 111

    […] pure outrage on this whole FUBAR situation, I defer to John Cole on this matter: I do not ever want to hear another damned word about the free market. I don’t […]

Trackbacks & Pingbacks

  1. […] pure outrage on this whole FUBAR situation, I defer to John Cole on this matter: I do not ever want to hear another damned word about the free market. I don’t […]

  2. […] I don’t understand economy. But it’s clear something has gone very, very wrong in the States. Nassim Nicholas Taleb writes The Fourth Quadrant: A manp of the limits of statistics over at Edgo.org. Jaw-droppingly good article about risk, risk management and probabilities in statistics. Oh, and for your light entertainment, John Cole’s had enough… […]

  3. […] John Cole, as usual, says it better.   […]

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