Excellent piece.

Informed and brilliantly explained.

Re. US

I think the mad rush to force through a deal gives some legitimacy to your argument. Likewise Paulson’s desperate attempt to block any oversight. He would have, and has to some extent, become something of an economic dictator – with almost limitless power to bail out his buddies.

Re. UK

I wonder, if we – the taxpayers – are to bail out banks, shouldn’t we implore bankers to sit through some basic home economics classes?

I mean, if banks are lending £650bn more than the deposits they hold, wasn’t it always going to go tits-up when the credit dried up?

I feel sorry for the families who are struggling to arrange a mortgage in the current climate. That said, I feel the borrowers who blew all their liquidity on cheap loans should bare some of the blame too.

“I mean, if banks are lending £650bn more than the deposits they hold, wasn’t it always going to go tits-up when the credit dried up?”

I think the problem is optimistic i-bankers confusing “when” with “if, but that would never happen in our wonderful globalised financial system, surely”

You know John, I was battling with conservatives over this for years on forums. They actually claimed I was a doom-monger and that *this* globalised capitalist dream would never end.

I was a sceptic, and they’d seen off my kind before.

Wow…Good thing this site has the word “Conspiracy” in it; otherwise, i would have taken it seriously.

Lets start with who created this mess: Liberals. Clinton and his administration pushed The Dept. of Housing and Urban Development, AND pushed Fannie and Freddie, to buy up subprime mortgages and loans from banks. Why? Liberals wanted to increase home-ownership among low-income families. So with Fannie and Freddie buying subprime loans form the banks, all the banks felt confident that they could issue these loans because Fannie and Freddie would always be there to buy them up; they woudlnt keep tons of them on their own books, thats for sure. This magnitude of subprime/defaulting loans never happened before until Clinton pushed for it.
So here we have it, Clinton’s admin. policies pretty much creating the real estate and housing bubble that burst, leading to this mess. But hey, thats not all.

Clinton repealed the Glass-Steagall act. By repealing this, banks were able to issue mortgage-backed securities. So all these worthless financial instruments people and banks are holding? Thats right! Couldnt have been possible without good ol’ Bill. Also, by people able to issue these securities, the banks were able to make more bad loans that they could just pawn off. Well done Clinton. Well done.

Hmm….the bailout was for Bush’s and Paulson’s friends. Novel, but wrong. Just because a Saudi prince or two have holdings in Citigroup, thats your big connection? The smoking gun? Too bad that the Saudi I know to which you refer has an entire holding firm that holds positions in a number of companies, in the US and abroad. Companies like AOL, Apple, Four Seasons, and Euro-Disney. So because hes diversified, a bailout of any industry would be labeled by you as a conspiracy, as opposed to a good economic measurement. Many US investors hold positions in financial firms in foreign companies. If any foreign country bails out the financial sector, Im going to be like you, and write about the big conspiracy of the ties between a foreign government and some investor. It will be very good reading, despite lacking credibility.

Alright, well Ive seen I wrote enough. I really dont think I need to prove much more because its apparent to me that you have no background in finance or economics, and by reading this, I hope all your readers can see that too…Oh, but what the hell. Lets see if I can make some real quick points.

-The bailout is the best move for the country. Theres a freeze in credit and lending, and when very large companies need lending, who do they go to? Thats right. big investment banks. People dont appreciate that these banks are the grease to the gears of the economy. Any and all major financing for large companies? Investment banks. When companies need to hedge their exposure and risk, who takes the otherside of that so that companies can continue with business as normal and properly operate. I-banks. Investment banks pretty much get that bad rap nowadays like the banks you see in old westerns when a farmer loses his land. Anyhow, with all those bad mortgage-securities on hand, it ties the hands of these banks. No one gets lending, and we get screwed. But government buys the securities, they get the cash needed to loan out. And the government holds loans that arent completely worthless. They may take longer to get repaid, but the government can hold onto them indefiently (unlike a company). So they are better off holding them. And then when they do get repaid, the 700 billion bailout is minimized, erased, or the government could potentially make money from the deal.

Alright, tired of typing. Hope you realize your wrong and do something better with your life since your not cut out for proper reporting of the facts. Ta-ta

I’m not sure whether or not JBV (yes, the number of prior JBs is embarassing, I think there’s there’s a historical family tradition of tax-dodging) is still reading this piece – but:

“because its apparent to me that you have no background in finance or economics”

wins some chutzpah awards in the context.

JBVI

Perhaps it does. I wont deny it. Maybe such a statement was too much. Maybe it wasnt. I feel annoyed when I read a story that doesnt have all the facts and fails to capture both sides. I dont expect a piece of be without opinions; it is important they are included; but the opinions shouldnt distort or hide the facts, and creates loose connections and claims that arent concretely proven, which I feel is the case here.

Perhaps I should have asked if there was any background in those fields. Is there?
I apologize if my remark was offensive in its audacity.

And regardless of that, I fail to see any rebuttals to the arguments and facts I presented. Your argument is that the bailout is to bailout Bush’s Saudi friends, yet, theres hardly any evidence other than the fact that yes, a Saudi prince has holdings in a US bank; hardly compelling evidence. When you make points as you do, you create this atmosphere of deceit and corruption; instead of pointing to one that may or may not exist. “Bush is bailing out the Banks; Bush has Saudi friends; Saudi friend owns shares in the Bank; Bush is clearly corrupt and bailing out his friend”. Smoking gun created. However, in the overall context, that this Saudi friend has his own investment firm and owns plenty of companies in the US and in the world, many foreign investors hold shares in US Banks and companies,and US investors hold positions in foreign companies; it really isnt as dubious as made out to be.

Let me raise another point. Bush had direct ties to Kenneth Lay; was a friend of his. And yet, the whole Enron scandal was brought out and I dont recall Bush bailing out Enron. He easily could have; the investigation could have easily been supressed, and would have been significantly cheaper and easier than the bank bailout. Yet he didnt. He could have said that with Enron holding so many energy contracts, that it was vital to the country to bailout Enron and save it, and there was no scandal. Could have, but didnt. If Bush is so corrupt and set on saving his crony friends, why didnt he?