Bush seeks $700 billion for bailout

Change came like a cold wind but what it heralded has yet to sink in. People are nervous, like they know someone has come to tell us of a death, but it hasn't been said yet - it isn't in words.

We are broke. If your calculator has enough digits you can try to add it up. The amounts, by themselves mind-bogglingly huge, for the unfunded liabilities, the bail-outs and the failures of Bear Sterns, Merrill Lynch, Lehman Brothers, AIG, Fanny Mae, Freddie Mac (and does anyone at this point think there aren't more coming?), the off-budget liabilities, the projected entitlement spending, hundreds of billions in building a nation for Iraq, have all piled on top of a massive deficit, in a nation whose citizens have forgotten how to save and instead max out credit cards, with fuel costs that will continue going up - taking everything with it, food and medical costs ready to terrorize those who thought them already high, the subprime credit crisis will continue to push the housing and construction markets deeper into stagnation, a dollar that is about to lose its status as the world's reserve currency as it gets ready to dive for new lows.

Congress is scared - they are going to go home and hold their breath, ready to issue load declaimers, "It wasn't my fault!" Bush isn't speaking. Tweedle-dee and tweedle-dum are still running for president, each promising to perform impossible feats made all the more ludicrous by the vanishing economy. No one is talking about the degree of inflation that will rage to fund all of this. And the baby boomers are just starting to retire with market-based retirement funds that are leaving existence almost daily in in ten digit chunks. Katrina, Rita and Ike are small potatoes by comparison.

Nanny government is now accepted as the standard for financial boo-boos - nothing will be permitted to fail - the more frightened the federal financial czars become the less they will tolerate the idea of not pouring money on every thing that looks shakey. No one believes that we could do to our currency what Argentina did to theirs, but then from a state of manic denial, it isn't belief that is driving the ship - it is evasion.

We were a superpower, and we pissed it away - stupidly! How sad is that?

(Edited by Steve Wolfer on 9/20, 10:19am)

Post 1

Saturday, September 20, 2008 - 1:07am

Come on Steve, you worry too much. We'll just print up some more money. Why, it was only a couple of days ago on NPR that I heard an economic consultant state that that was one of the jobs of the government, explaining why we could never run out of money. So, we'll be OK. Don't worry, be happy!

Regards,
--
Jeff

P.S.: I didn't vote for George Bush either. Go me! (That oughta piss off a few people...)

(Edited by C. Jeffery Small on 9/20, 1:11am)

Post 2

Saturday, September 20, 2008 - 4:49am

George Bush has once again accomplished the impossible, and managed to go from Truman to Nixon in one weekend.

Post 3

Saturday, September 20, 2008 - 9:08am

Bush seeks $700 billion for bailout

The Bush administration has asked Congress for the authority to spend as much as $700 billion to purchase troubled mortgage assets.

(http://www.cnn.com frontpage story September 20, 2008. 12:00 PM)

Antoninianus of Claudius Gothicus (270 AD) note copper core showing through thin silver wash.

http://www.vcoins.com Select Ancients. Choose search. Enter "Antoninianus" and find about 9000 examples, from emperors and usurpers of the "military anarchy" of the mid-3rd century.

(Edited by Michael E. Marotta on 9/20, 10:07am)

Post 4

Saturday, September 20, 2008 - 9:15am

The funniest investment advice I've heard is to invest half in stocks, half in USD. Hilarious. I think USD is the last thing I'd want my savings in right now. Or does anyone think holding USD is a good idea at this point?

USD: US bonds, US money markets, US checking/saving accounts, USD cash

Post 5

Saturday, September 20, 2008 - 1:48pm

Dean,

It depends on what timescale you are talking about. We've already had a considerable slide in the U.S. dollar. The Chinese and other countries with cash and export economies will continue to prop up the dollar for years to come by continuing to buy US Treasury debt. The real cataclysm will come if and when they decide their economies are no longer dependent on the American consumer.

Jim

Post 6

Saturday, September 20, 2008 - 2:30pm

Steve,

Yep. Either we recognize that Medicare and Social Security benefits can't be paid or we inflate out of it. One of the two.

Jim

Post 7

Saturday, September 20, 2008 - 2:45pm

James,

I would say that other countries will react to our massive inflation by not rolling over as large a percent of dollar denominated instruments. And massive inflation is sure to follow the bail-outs when combined with big government spending in other areas. And if we continue on this path, the deep recession and seriously reduced purchasing power will diminish consumer spending and that will give countries like China fewer dollars to invest. I think it is a mistake to see these things as either-or (e.g., China will continue to invest in treasury bonds as long as we buy their goods) - when it is usually a set of related forces that move along a spectrum and you look for trends - and points of acceleration.

Post 8

Saturday, September 20, 2008 - 3:21pm

Steve,

You're right. In a portfolio, you would think of the % of asset allocation you give to certain types of investments. As you reach an acceleration of inflation, you get increasingly out of dollar denominated assets.

The fallout from inflation is the decline in purchasing power and the driving up of long term interest rates. Our continually inflationary policies have been masked over the last 15 years or so by structural changes resulting in substantial cost reductions in the global supply chain and the willingness of the Chinese and others to buy U.S. debt.

Jim

Post 9

Saturday, September 20, 2008 - 6:45pm

J H-N "... and the driving up of long term interest rates."

I just paid off a credit card that had 11.99% interest and offered to close it. They countered with a better rate. I could have 9.99% fixed or 7.99% variable (prime plus 2.99%). I chose the latter and the CSR fairly gushed, telling me that interest rates are coming down, blah, blah, blah... I figure we have about a year or less at low rates. ... 18% rates are only a mid-term election away...

Post 10

Sunday, September 21, 2008 - 5:16pm

Because of comments made under another topic relating to my post #1 above, I wanted to clarify a few things for the record.

Steve's post #0 is spot-on. I agree with it completely and sanctioned it when it was originally published. The financial mess in this country is staggering and we are all going to bear the fallout for this for the foreseeable future, most likely through the erosion of our savings, increased prices for goods and services and a drop in the purchasing power of the dollar - all resulting from inflation. Things are going wrong for the US on so many fronts and at such a staggering pace that it does seem like this might be the beginning of the end of out status as a superpower. My post was, I thought, an obvious joke - laughing at a situation that is actually too horrible to contemplate. I generally do not laugh at bad thing over which I have some control; instead, I focus on doing what I can to correct the situation. But what can I do about this mess except laugh? You can't even vote for one of the two candidates for president on the premise that one will be marginally better than the other at addressing our problems. Both of them have clearly demonstrated that they do not have a clue as to where the source of the disaster lies, and each proposes "solutions" that are going to sink us even deeper. Hence, my parting ironic comment about not voting for president Bush. That wasn't me gloating over other fools for having made the proper choice in the last election. Read that comment with the nervous laughter of someone who sees how futile voting has been in the past and how that futility still holds today.

Just to be crystal clear, while I don't currently vote, for a number of reasons that I have outlined elsewhere, that is my personal decision and strategy. That choice in no way conveys a negative judgment regarding other people's decision to vote strategically for what they see as the best candidate. I have stated this explicitly a number of times and assumed that people on this forum would have been listening. Therefore, when I say: "That oughta piss off a few people...", I expect that this will be understood and read as thought the entire line was one huge smiley. It pains me greatly that any of you would think that I am malicious enough to actually waste my time crafting up posts for this forum that were designed to push peoples buttons with the intent of actually pissing them off! The whole idea is so ludicrous to me that I cannot believe that actually expressing that sentiment could be taken as anything other than a massive farce. I apologize if it came off the wrong way, and I hope that this explanation will help people get a better sense of the sort of person I am, and will be able to read my future posts in a more charitable light.

Regards,
--
Jeff

Post 11

Sunday, September 21, 2008 - 8:09pm

Jeff,

I haven't forgotten that you were the only fully rational voice in that thread where a number of us were all arguing that the other's choices in voting this way versus voting that way were violations of principle. You pointed out that we were each being principled in our strategy. I had to back-track and change my words.

I didn't understand your context or meaning on the Bush comment - it went over my head - so I dropped it instead of assigning some kind of meaning to it. I never would have assumed it to be gloating or you showing some never before seen malicious side. And I fully understood that you were horribly opposed to the bailout and the awful costs it will generate.

I don't think you needed to apologize.

Post 12

Tuesday, September 23, 2008 - 9:31am

I am wondering - maybe it is a good idea to load up on low-interest debt and pay it back with inflated money later?

Post 13

Tuesday, September 23, 2008 - 7:16pm

KE: "I am wondering - maybe it is a good idea to load up on low-interest debt and pay it back with inflated money later?"

You would have to be close to the source of inflation, otherwise the compounded interest and your inability to earn more cheaper money would sink you... believe me...

Post 14

Wednesday, September 24, 2008 - 6:20am