It was arrows marketed for use by children. It specified that. Not hunting or anything else, but wooden arrows for use by children.

Besides, it's kind of a pointless thing to argue. There was probably a reason for it when it was originally enacted, even if it was an inane or stupid reason.

[Edited on October 5, 2008 at 2:08 PM. Reason : .]

10/5/2008 2:08:00 PM

http://www.guardian.co.uk/business/2008/oct/05/wall.street.bailout

Quote :

"Fears are mounting that many Wall Street banks and financial firms will refuse to participate in the US government's $700bn bail-out package, leaving global markets and world economies in a perilous state for months to come. 'There is a growing feeling that banks ... might instead decide to tough it out,' said Thomas Caldwell, chairman and CEO of Caldwell Financial, a $1bn-plus fund manager. ... Sources close to Goldman Sachs and Merrill Lynch indicated the banks might choose not to participate in the bail-out as there is a growing view on Wall Street that the market may be bottoming out."

[Edited on October 5, 2008 at 2:36 PM. Reason : ]

10/5/2008 2:36:37 PM

^So... despite government mistakes, some elements of the market are choosing to do the right thing?

Holy motherfucking shit.

10/5/2008 2:37:48 PM

lol, the saga continues


I wonder how many banks will actually take that route. If its a lot, the there are going to be a lot of discredited politicians/chairmans.

10/5/2008 3:06:11 PM

but... didn't you know? THe earth was going to explode if we didn't do something in TWELVE HOURS. two weeks later, the earth is still fine, and the bill passes. hmmm....

10/5/2008 3:30:13 PM

yeah, its pretty sad but . . .

I dont believe a single word that this administration, or really even anyone in congress (except a select few) tell me.

I want to trust that the government is working in my interest but just find it impossible

that to me is the definition of a broken system (assuming you can have a working system)

10/5/2008 3:36:44 PM

i still find it amazing that the Democrats believed a word he said this time around. it is just astounding. It almost makes me believe the bullshit Illuminati conspiracy theories that salisburybot throws around.

10/5/2008 3:37:42 PM

Quote :

"there are going to be a lot of discredited politicians/chairmans"

too late for that

10/5/2008 3:41:56 PM

^too late as in it already happened? gotta agree, but if a lot of banks dont even use this legislation, well, thats the last nail in the coffin isnt it




yeah I wonder what Salisbury would have to say about this situation???

my guess is wral would do a special on how State is a neo-nazi breeding ground

[Edited on October 5, 2008 at 3:48 PM. Reason : .]

[Edited on October 5, 2008 at 3:59 PM. Reason : ,]

10/5/2008 3:47:14 PM

yeah, I meant it's already happened

10/5/2008 3:51:53 PM

Have we witnessed the final ember of the fundamentals of America's founding premises become extinguished?

10/5/2008 11:10:15 PM

NO PAIL-IN!!

10/5/2008 11:10:56 PM

^^ nope, that'll happen in January. Obama will surely extinguish whatever remained of America's founding principles. Hell, the man is dumb enough to say that the "promise of America" is that we steal from those who earned it and give to those who don't work.

10/5/2008 11:54:11 PM

^haha

10/5/2008 11:56:41 PM

that is what he said, you know. just not in those exact words, of course

10/5/2008 11:59:59 PM

the middle class doesn't work? The "founding principles" are a bit outdated, no?

10/6/2008 12:01:56 AM

sigh. it aint the middle class who are getting the handouts. and, btw, it's the middle class who will be getting raped. that is, frankly, part of the Democrats' plan, you know. more poor, more base.

10/6/2008 12:28:51 AM

^ eh?

How do you figure the dems are raping the middle class?

10/6/2008 12:32:35 AM

because they raise taxes on all but the poorest members of society. The rich can afford tax attourneys. The middle class cannot. Thus, the middle class get taxed into oblivion.

10/6/2008 12:33:57 AM

Nobody's going to get taxed into oblivion under Obama's plan.

And if they are, they can always go on the generous dole he's supposedly setting up!

10/6/2008 12:38:17 AM

The only people who will see tax raises are 250k and up. I think Most of the middle class, ~50k will see tax cuts.

Quote :

"it aint the middle class who are getting the handouts."

you'd be surprised how much of the middle class doesn't have healthcare or has a struggling mortgage.

10/6/2008 12:44:37 AM

^how exactly would he do that and pay for this bailout as well as the numerous government programs he wants to install? no way just taxing the top 3% will give us the increased revenue necessary for this.

dont kid yourself. Obama means more taxes for most of us.

[Edited on October 6, 2008 at 10:41 AM. Reason : .]

10/6/2008 10:41:00 AM

back on topic -

60 minutes did a pretty good job last night explaining a big chunk of the problem

http://www.cbsnews.com/video/watch/?id=4502673n

10/6/2008 10:43:21 AM

So much for the bail out helping the stock market.

I wonder what the record is for fewest percentage of incumbents re-elected nationally in a given election? I bet we get close to it this election whatever it is.

10/6/2008 10:49:32 AM

The Dow Jones is down more than 500 points today ... well, at least oil prices are going down ...

10/6/2008 10:50:40 AM

What businesses manufacture guillotines. I have a feeling that their stock will start to do real well soon.

10/6/2008 11:00:08 AM

It can all be explained away in a game of tetris:

10/6/2008 3:23:55 PM

^ I lol at the wachovia part

10/6/2008 6:17:24 PM

^^Nice. I lol'd.

10/6/2008 6:30:22 PM

So, any idea why the markets tanked today, even thought the bailout should have increased confidence? I mean, the bailout was supposed to help avert disaster, right?

10/6/2008 6:33:29 PM

The market tanked today because of a credit seizure and negative economic indicators, particularly in Europe. But feel free to blame it on the bailout.

10/6/2008 6:44:11 PM

Quote :

"the bailout was supposed to help avert disaster, right?"

And remember we had to pass it fast, that weekend...to restore confidence.

The U.S. and world markets know that the gov't isn't going to fix this.

10/6/2008 10:19:02 PM

Quote :

"Fears are mounting that many Wall Street banks and financial firms will refuse to participate in the US government's $700bn bail-out package, leaving global markets and world economies in a perilous state for months to come."

so is anything going to come out of this rumor?

10/6/2008 10:21:00 PM

I heard a great thing today on NPR. The speaker was basically saying that no one in Washington right now understands the financial markets. Yet, he also said that the government needed to step in and add regulations to the financial markets...

10/6/2008 10:33:03 PM

Quote :

"Bush pledges "we're going to come" this economic crisis. "

From the headline on cnn.com.....

somebody forgot a word here.

10/7/2008 2:24:11 PM

Ignore the beginning of the video, we all know that part, skip to the numbers around the 3:25 mark . . .





I mean, this isn't anything we didn't intrinsicley know, but I still believe that the bailout was simply bankers cashing in their last investment that held any value . . . congressmen.

10/7/2008 2:43:09 PM

McCain/Obama tax plans:

http://www.washingtonpost.com/wp-dyn/content/story/2008/06/09/ST2008060900950.html

From way ^^^^ up there and kind of off topic

10/7/2008 2:44:13 PM

Aaron are you really arguing against the bailout on a day by day basis?

You know, not taking in the big picture

You know

The logic that started this entire circus.

10/7/2008 3:58:35 PM

Quote :

"While innocent people will undoubtedly be hurt as Wall Street adjusts to the modern global economy, there will be important gains to the country. In fact, the principles economists cite when extolling the benefits of “free trade” may actually apply to some extent to Wall Street."

http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/wall-street-follows-the-path-of-the-steel-industry-in-pittsburgh/

10/7/2008 8:43:04 PM

Quote :

"Aaron are you really arguing against the bailout on a day by day basis?"

This was exactly the tactic used by the politicians who shoved this bailout through. Remember?

We had to pass it before the markets opened on Monday.

And now Bernanke is hinting that he's going to lower interest rates again. Cheap money was one of the big reasons we got into this mess...and now he wants do it some more. This guy must go.

10/7/2008 10:30:47 PM

you are gonna have to clarify what you mean, SandSanta. I'm not really getting what you are saying.

I will say this: the delay in getting the bailout bill through Congress certainly led to more seizing of the credit markets, as companies held their assets and funds until they saw what was gonna be proposed. It absolutely became a self-fulfilling prophecy of "oh noes!!! people won't be able to get loans for x and y," because, as I said, the lenders wanted to see exactly what they stood to gain or lose from any bailout.

Moreover, what was announced today is precisely what was needed then: giving cold, hard cash to the lenders in order to unseize the credit markets. And you know what? That didn't require a fucking $700billion bailout bill. The fed was already authorized to fucking do that. But, instead, we had a president provoke a major crisis at a time of already great economic instability, in order to, I'd argue, help out his buddies on Wall Street. And the Dems played right along.

Sound familiar?

10/7/2008 11:46:00 PM

How's the bailout working for you so far?

It pains me to see McCain offering up even more socialism as a cure for this problem. Using the Treasury dept to service loans? Come on.

The GOP had control of the gov't for many years. Why didn't they put their foot down and stop the abuse at Freddie and Fannie?

Now it looks like Paulson, Bernanke, Bush and the gang are just trying random ad-hoc things trying to stop the bleeding. The world's central banks, parasites on our economies, are fearing the death of their host and wildly trying to coordinate efforts.

10/9/2008 8:39:34 PM

This crisis had nothing to do with Fannie and Freddie. They were part of the housing market. This entire crisis can be blamed on Wall Street. I've explained it before but here's what's happened.

Wall Street, seeing huge profits, borrows money in order to buy more stocks. Those stocks go up as a result of more buying, resulting in higher profits and a greater opportunity to borrow. In 2004, the SEC relaxed restrictions on borrowing against stocks, creating the main problem we are seeing now. Stocks got built up much higher than they should have based on companies being allowed to buy them based on credit backed up by other stocks (you should be beginning to see the problem here). When those stocks stopped going up (as a result of the housing market tanking) profits stopped coming in and the people on Wall Street couldn't make their debt payments because all their assets weren't liquid and tied up in stocks they started to sell. That's why the stock market started falling slowly at first. People started selling and no one realized that they were all about to lose everything. People who sold at the top made out like bandits and everyone else was left with stocks that were worth less than the debt they owed based on those stocks. The housing market was just the straw that broke the camel's (stock market's) back. This was a longtime coming.

The worst part of all of this is that Wall Street somehow convinced the government that they needed this money to save the economy. This problem was created by Wall Street and it cannot be fixed by anyone but Wall Street. Read the article that GoldenViper posted about Wall Street competitiveness in a global economy. They got too fat and now the fat is being trimmed, except it's being trimmed on the backs of the American people. Anyone who blames the housing market for what's going on right now is simply failing to see the big picture. The wider problems of the economy can be blamed solely on Wall Street.

10/9/2008 9:16:21 PM

Quote :

"This crisis had nothing to do with Fannie and Freddie."

I beg to differ. while Freddie and Fannie are not the sole cause of this problem..they are definitely part of the problem..one which apparantly required a $20 billion bailout.

Democrats were howling for the heads of the Enron leaders. Enron losses were a drop in the bucket compared to these GSE scandals.. I'm not hearing any howls from democrats now. What gives?

Yes Wall Street shares in the blame..especially characters like Hank Paulson, John Mack, Chuck Prince, Stan O'Neal, and others who fed the housing bubble in the 2000s. They pressured gov't into relaxing restrictions. But why is the gov't messing around in the gambling dens of Wall Street? Let the wolves devour each other. ANyone who wants to take their chances in stocks must accept the risks and responsibilities. The average working person shouldn't be forced to pay for Wall Street gambling losses.

10/9/2008 10:02:57 PM

Those people didn't make out nearly as well as the private sector as far as CEO pay and whatnot were.

[Edited on October 9, 2008 at 10:08 PM. Reason : ]

10/9/2008 10:08:15 PM

I'm sorry but you're failing to see the big picture.

The 2004 exception to the 12 to 1 borrowing rule for the 5 major investment banks was certainly disasterous, and allowed those companies to over-leverage to the point where 3 of the 5 blew up.

However, acting like the housing market wasn't the driving force in this unfolding crisis is simply sticking your head in the sand. You characterized this housing market as "The straw that broke the camel's back". There was nothing strawlike about the housing market. The mortgage-backed securities that have infected the entire financial system were integral to this collapse. What is that 700 billion dollar bailout designed to do? Buy up those mortgage-backed securities that nobody can sell anymore.

Read this to get an idea of the role the housing market in this mess:

Quote :

"Background: To understand the ongoing subprime mortgage and credit crisis, let’s go back a few years. The end of the Dot-Com Bubble was the start of another, even larger bubble: the housing bubble. From 2000 to 2005, the median sales price of existing homes increased year over year and speculative investment in properties skyrocketed. "Flipping" or buying a house, doing some quick renovation or repair, then selling it for a handsome profit, became sort of a national pastime, with cable TV shows dedicated to it. In 2005 we saw the launch of not one but two shows, one called Flip This House and another - completely unrelated - called Flip That House. When property values kept on increasing, home loans became very easy to get (after all, if the borrower defaulted on the mortgage, then the bank got the house - which value kept on increasing anyway!). New mortgage products became popular: subprime loans for borrowers who otherwise wouldn’t qualify for loans because of their lack of creditworthiness (hence the term "subprime") and adjustable-rate mortgage, which, as its name implies, have a variable interest rate. In addition to ARMs, there were also interest only loan - which let the borrower pay only the interest and not the principal on the loan for a period of time, and negative amortization loan (or NegAm) which let the borrower pay a portion of the monthly payment (the rest got added to the total amount borrowed - in this type of mortgage, the amount you owe gets larger year after year!). How easy was it to get a mortgage? One mortgage provider, HCL Finance (motto: "Home of the ‘no doc’ loan" - no doc refers to no documentation of income required) had a product called the NINJA loan. It stood for No Income, No Job (and) no Assets! (Source) In 2006, home prices started to go down and a year or so later, borrowers of subprime mortgages started to default on their loans. In 2007, almost 1.3 million properties were being foreclosed - a jump of 75% over the year before. (Source) As late as March 2008, it was estimated that 8.8 million homeowners (about 10.8% of total homeowners) have zero or negative equity in their homes, meaning they owe more than their houses are worth. (Source) Had that been it, the crisis probably would’ve been isolated. Sure some banks would undoubtedly fail because they made bad loans, but the subprime crisis had since spread to the credit markets and created a massive credit crunch that is larger and far more dangerous than the subprime crisis. Securitization: To understand the current credit crisis, it’s important to understand something called "securitization." Securitization is an old process by which an asset that generates a cash flow can be converted into a security (like a bond), that can then be bought and sold in the market just like any other security. A great example is the Bowie Bond. In 1997, musician David Bowie issued a bond (basically a loan note) secured by the current and future royalty revenues of his first 25 albums (a total of 287 songs … here it was the "asset"). The 10-year Bowie Bonds were bought for $55 million by Prudential Insurance Company, who then would collect on the royalties for ten years. So David Bowie got $55 million up front, and Prudential could either keep the bond (and get the song royalties) or sell the bond for profit. (Source) Back to the topic at hand. Traditionally, banks hold mortgages until maturity, with profits being interest of the loan. But Wall Street had an idea: why not do to mortgages what David Bowie did to songs? So they (and by they, I mean Freddie Mac, Fannie Mae, and 12 Federal Home Loan Banks) pooled together mortgages and bundled them up into asset-backed securities (ABSs) and sold the package to get up front money (the investor would get the monthly mortgage payments from all of the homeowners whose mortgages got bundled). But wait - these mortgages all had different risks. Some were safe, stodgy 30-year mortgages whereas others were subprime loans that though were more risky, also had higher interest rates and thus were more profitable. Not to worry: Wall Street split the ABSs into "tranches" (just a fancy word meaning sections or classes): the safest were rated AAA (by rating agencies whose sole job was to gauge how risky something was … and got paid by those whom it rated - talk about a conflict of interest!), the rest were medium and low-rated tranches. The logic was this: one borrower might default on his loan, but if you bundled them together, there’s safety in number: it’s unlikely that ALL borrowers would default all at once. But wait - there’s more. The medium and low-rated tranches were riskier investments, but it’s unlikely that all of them would default at the same time. So let’s take all those medium-to-low rated ABSs and pool them together to create something called collateralized debt obligations (CDOs). And through the magic of rating, we once again could turn some of these risky securities into - tada! - A-rated securities fit for pension funds. Repackage these CDOs a few more times and pretty soon you wouldn’t know how much subprime loans were actually in them. (Source) The Credit Crisis: So how did the housing downturn infect the credit markets? Well, when the housing price dropped, a large number of borrowers began to default on their mortgages. Suddenly, ABSs and CDOs looked very suspicious as no one knew how much exposure to the subprime mortgage mess these securities actually had. The market for ABSs and CDOs dried up and holders of these securities couldn’t sell them. In many cases, these companies leveraged their purchase of these securities, which really amplified their losses. Just as the market worsened and investment firms and companies found that their holdings of ABSs and CDOs were worth far less than they had paid for them (and thus had to write off that loss in their books - causing a number of hedge funds to collapse), another domino fell: Credit-default Swaps (which took down AIG). Credit-default Swap: Credit-default Swap (or CDS) is basically insurance on debt. Say that a bank buys a large amount of bonds from a company. As with any debt, there is a risk of the debtor fail to pay the money back. To protect against the company defaulting on its bond payments, the bank would buy CDS. In case of a default, the bank go to the insurer and cash in its CDS. American International Group or AIG was the creator and the largest seller of CDS. It thought that CDS was an insurance product just like a homeowner’s policy, but obviously it was wrong. "Any one house burning down doesn’t increase the likelihood that lots of other houses will burn down," explained Adam Davidson of NPR, "That doesn’t apply to bond insurance." (Source) In case of bonds, a default can create a domino effect: as investors lose confidence and sell, the price of bonds go down and the interest rates go up. Borrowers who can’t find capital to meet their obligations would start to default on their bonds and the cycle deepens. (Photo: Gone-Walkabout [Flickr]) To make sure that AIG would actually pony up and pay the CDS in case of a bond default, it had to post a collateral. This collateral depended on their credit ranking - as their credit was downgraded, it had to post more collateral. Because of its worthless mortgage-backed securities assets, AIG’s creditworthiness would be downgraded - which meant that it would need to post as much as $250 billion, which of course it didn’t have laying around, in collateral in a matter of weeks! Why Bail Out AIG? Over the years, the CDS market has grown into a $70 trillion a year business. And since no one knew who has CDS from AIG, the failure of AIG would mean that a lot of companies are holding bonds that are significantly riskier than they first thought. Companies that had "hedged" their bets by buying CDS would find their books suddenly unbalanced, which means they have to sell off assets to cover their risks or they would become insolvent. This failure would propagate throughout the entire economy and create a "systemic failure." That, by the way, was what the government was trying to avoid by bailing out AIG. (Source) The Credit Crunch: The basic essence of the credit crunch is this: banks won’t lend because they can’t be sure that they’ll be paid back. Companies with excellent credit ratings found themselves unable to get a loan (after all, all those ABSs and CDOs had excellent ratings, so who’s to say that the ratings are worth anything?). Even some banks find themselves unable to borrow money from other banks! The Solution? As you well know by now, the White House requested, and the Congress passed a $700 billion bailout program. The idea is to for the government to buy distressed asset, especially mortgage-backed securities, from the nation’s banks, which would inspire banks to lend again. The bailout remains unpopular with the general public, who perceive it as bailing out Wall Street, who caused this mess in the first place. Whether the bailout will work or not remains to be seen. "

10/9/2008 10:09:21 PM

The above article is a surprisingly lucid (and accurate, at that) account of what was going on. But here's a part I have a quibble with:

Quote :

"Why Bail Out AIG? Over the years, the CDS market has grown into a $70 trillion a year business. And since no one knew who has CDS from AIG, the failure of AIG would mean that a lot of companies are holding bonds that are significantly riskier than they first thought. Companies that had "hedged" their bets by buying CDS would find their books suddenly unbalanced, which means they have to sell off assets to cover their risks or they would become insolvent. This failure would propagate throughout the entire economy and create a "systemic failure." That, by the way, was what the government was trying to avoid by bailing out AIG. (Source)"

Here's what I don't get - outside of posting AIG's collateral for them, how exactly was the FedGov supposed to insure each of these CDS's? i.e., if AIG is short $250 billion, that's nearly a third of the entire size of the bailout Congress just passed. And this assumes that AIG's creditworthiness doesn't drop again as a result of the bailout - which seems unlikely.

Furthermore - AIG is just one (large) guarantor of CDS. They're not the only one on the market. What happens when the next one finds itself overwhelmed? (i.e., this begins to feel like we're simply plugging out fingers in the dike, hoping that yet another leak doesn't suddenly spring up.)

Furthermore, as we are seeing, the idea that the banks refuse to lend because of distressed assets on the books is starting to smell like just so much red herring. Banks aren't lending to each other because they fear that other banks aren't even solvent. Of course you don't lend out money you don't think you'll get back - especially if money's already a problem on your end.

What has happened is a massive deflation of equity - something which buying out these distressed equities just isn't going to fix, unless the FedGov really takes a bath on these assets and buys them for far, far above current market value.

So, again - why are to we to believe, other than as an article of faith, that buying up distressed assets (rather than allowing insolvent banks to fail and solvent banks to buy up and liquidate their assets) will somehow revitalize the lending industry?

[Edited on October 9, 2008 at 10:22 PM. Reason : .]

10/9/2008 10:20:43 PM

^Good questions. And yes, I think the article I posted really summarizes how we got into this mess. It was actually just the end of an article covering the last 10 financial meltdowns, dating back to 1907. A pretty good read if you have the time.

http://www.neatorama.com/2008/10/08/10-american-financial-meltdowns-in-the-past-century/

10/10/2008 12:42:01 AM

^Thank you for that.

10/10/2008 1:34:52 AM

Quote :

"So, again - why are to we to believe, other than as an article of faith, that buying up distressed assets (rather than allowing insolvent banks to fail and solvent banks to buy up and liquidate their assets) will somehow revitalize the lending industry?"

At this point we have switched to direct capital injections. That is buying a stake in troubled banks. The money the government invests will add to the asset side of the balance sheet while taking a subordinate posiiton on the liability side. This makes the banks solvent.

Will it work? Will it be enough? We don't know. But we do know that if we do nothing the probability of complete collapse is fairly high. This is risk management not a white knight.

10/10/2008 10:50:53 AM