Republican Socialists

mykevermin

mykevermin

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So we found $85 Billion to bail out one company, rather than letting the free market decide who succeeds and fails.

That's the lesson to be learned: if you're a big enough company, you can't fuck up. The government will bail you out.

But here's the thing: the very party that says we can't afford to sustain Social Security, we can't afford health care for everybody - have just given $85 BILLION (that's 1.5 times more than we spend on education in a year federally, just so you know) to ONE COMPANY.

Long live the Corporate Socialist States of America!
 
What I wanna know (and haven't bothered to learn), if somebody wants to summarize for me - Are these bailouts considered loans that have to be repaid or is it just like "here's $85 billion, thanks for your business" and there's no obligation? Or does the government now own and control said business?
 
[quote name='willardhaven']At least our government is blatantly corrupt... right?[/QUOTE]

In a way. There's a certain severe degree of cynicism that comes with this kind of in-your-face conduct, and coupled with the in-your-fucking-face-flagrant lies of McCain/Palin over the past 3 weeks, and the fact that the presidential race is too close to call - it just all makes you want to pack up your political suitcase, say "fuck it all," and go about living your life and ignore something as futile as politics.
 
I've always been that way, separated I mean. I think now that the truth is smacking people in the face (or wallet) there will finally be a chance to change things.

But what can we really do other than talk politics?
 
well mccain has said the fed needs to stop and called for sec charman to be fired.

obama has said that he support what the fed is doing
 
The bailout was a smart move and, in the end, will either end up being of marginal cost to the taxpayer or actually being profitable. AIG will be liquidating their $1t in assets under new management in order to repay that $85b loan at 11% interest in two years. This is, essentially, a way to drag out bankruptcy -- gently lay the titan down instead of allowing it to fall and crush the villagers. The bailout can hardly be called socialist. Really, though, I expect this whole crisis to teach a lot of conservatives that deregulation is not the answer. I hope the Ron Paul crazies are taking note.
 
[quote name='SpazX']What I wanna know (and haven't bothered to learn), if somebody wants to summarize for me - Are these bailouts considered loans that have to be repaid or is it just like "here's $85 billion, thanks for your business" and there's no obligation? Or does the government now own and control said business?[/quote]
From what i understand, they're basically buying an interest in the company. So they end up owning a share of said company.
 
The government isn't "giving" money away. It is basically taking control of these companies and will be repackaging the assets and then reselling them on the open market over time instead of allowing these companies to go belly up and have the market be flooded with assets that it can not currently manage. In the grand scheme of things it is the right thing to do to prevent a complete financial system crash but it is just funny how everyone is all free market crazy....until we hit a speed bump, then the screaming changes to SAVE US UNCLE SAM.

Back to the topic at hand, if managed correctly the government should actually make a substaintial amount of money on all these bailouts, and this RTS like structured deal we will hear more about in the coming days, when everything has been sold off many years from now. Of course they are using taxpayer money to fund all these moves and I'm sure the taxpayer will not receive a check from any profits that are made but still.

To put it simply, with the bailouts of the past few weeks the US government basically just become the largest hedge fund in the world.
 
[quote name='Koggit']The bailout can hardly be called socialist.[/QUOTE]

Government redistribution of wealth, even if it's redistributed to the wealthy, and interfering in businesses in the free market from failing on their own, is socialism no matter which way you slice it.

Lehman brothers experienced the free market.

Fannie Mae, Freddie Mac, and AIG did not. And probably WaMu in the next month or two.
 
Who is the government is redistributing wealth to, exactly? I disagree, but without you being more specific about who's benefiting I can't really refute it.

The way I see it, the only losers in this are AIG execs. Everyone else benefits. I mean that: everyone. Low class, middle class, investors, the government -- everyone.
 
Bailouts of private companies like AIG are ridiculous. Fannie Mae and Freddie Mac I don't like being in existence the way they are (or were), but the government made commitments to them and it's hard to just pull the rug out when the going gets tough. AIG, however, is a totally private company with no expectation of government help at all. If AIG was run badly and bankrupts itself as a result, why does the government have to "rescue" them? Like any other company gone bankrupt, auction off their assets and let the market do its will. it's bullshit that well-run companies (not to mention all the rest of us regular-Joe taxpayers) have their tax monies diverted to bail out fuck-ups like AIG.
 
Some guy posted this on another forum I go, I felt it was clear and to the point and did a good job of hitting most of the points the nay-sayers keep going on about

I think a lot of the negative sentiment here comes from a failure to understand both the terms of the Fed’s intervention as well as the potential implications of an AIG bankruptcy.

1) They are not being given money. They are being loaned up to $85b in order to allow them to meet their short-term cash and liquidity needs.

2) We are not giving them money for free. They have to pay it back within 2 years and at a punitive interest rate of LIBOR + 8.5%. The entire company has been put up as collateral. In addition, the US will be creditor number one so our money will be paid before any other creditor and/or shareholder. We also take 79.9% ownership of the company. Lastly, we are replacing their senior management.

3) The purpose of the rescue package was not to save AIG as a business, but rather to prevent its immediate collapse and the resulting market disruptions. In essence, the plan is to loan them money now and have them pay it off by selling their assets gradually over the next 24 months rather than in the span of 1 week. We’ve basically put them in a controlled bankruptcy that will allow their assets to be liquidated over time.

4) There are some very important reasons why AIG could not simply go bust as so many of you are advocating. The problem with AIG was twofold: 1) they invested their own money quite heavily in financial products whose value has plummeted recently (mortgage-backed securities, etc.) draining them of cash and 2) they are a major play in the credit default swap market.

Credit default swaps, though complicated derivative financial products, are basically insurance you can buy for a piece of debt (i.e. bond) that pays you if the debtor defaults (i.e. stops making their mortgage payments). Their involvement in this market totaled about $440 billion ($65 billion of which was insurance on subprime mortgages).

Their counterparties (buyers of this insurance) were all financial intuitions such as banks. This is where it gets a little more complicated. All banks are leveraged to a certain extent meaning that they have more debt than assets. The assets they hold are not necessarily cash, but a whole host of financial products including bonds, etc. A bond that they have purchased some kind of insurance for is inherently less risky than the same bond without, so it is a more valuable asset.

If AIG went bust (which absolutely would have happened by today had the Fed not stepped in) then all the protection ($440 billion) would disappear and all the banks holding those bonds would suddenly find they had more risky, less valuable assets on their hands. These banks would suddenly have less capital on their books. In order to maintain the proper (sometimes legally required) ratio of capital to debt (in essence their balance sheet) they would have to seek outside capital. Of course this is what all the banks have been doing for the past year and it’s unlikely they would have been able to raise sufficient funds.

AIG is so large that this would extend to nearly every financial institution on the planet, and the progression from AIG bankruptcy to bank write-downs to banks in need of yet more emergency capital would have shaken the global financial system to its core. The problems we are currently facing would be magnified greatly.

This does not mean I agree 100% with the Fed’s actions. Honestly, I would like to have seen some of the major banks put up at least a little of their own cash since this is for their benefit. Nonetheless, action had to be taken and it was. AIG shareholders are going to be left with virtually nothing. The stock is down over 95% from its peak, and, with the government taking a 79.9% stake, their ownership of the company will be greatly diluted. At the end of the day, the US government should ultimately make a solid return on this action barring any catastrophe.

The interesting thing to watch is how this changes the regulatory landscape. Obviously the current regime was not sufficient to prevent this so the government will have to consider significant changes. Additionally, the entire credit derivatives market (which includes credit default swaps which alone are valued at $45 trillion) will face regulation in the future. Surprisingly, they are not regulated in any capacity and this is a major reason for why things were able to get to the point they are.
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[quote name='RAMSTORIA']well mccain has said the fed needs to stop and called for sec charman to be fired.

obama has said that he support what the fed is doing[/QUOTE]

That's actually what I wanted to say too. And I would like myke to address what he thinks of Obama's seal of approval on the whole mess.

I also do not see it as a redistribution of wealth, directly. Because the wealth being handed to these banks is being conjured out of absolutely nothing (which is what the Fed does). Now you could easily argue that the common man will end up suffering for it, and paying for it in many ways, but the money given to these banks was not taken directly from us.
 
You mistakenly think I'm against giving AIG the money.

Or Fannie or Freddie.

I'm not. I'm against the government buying into companies and giving companies 1.5X what we spend on education each year, all the while we can't seem to find money for health care or social security.

It's the principle that gets to me: "I'm from the government and I'm here to help" applies if you're wealthy or a corporation, but not if you're a human being.

This is what bothers me: the principle shows just WHO matters in the United States these days. We have, by virtue of this act, set clear boundaries around persons and organizations we consider "deserving" and "undeserving" of aid when in peril.

There are a number of corpses in Louisiana and Mississippi that learned that lesson that 3 years ago. If only they were white (collar).
 
Well I can't say I really disagree with you. I'm just unhappy with government expenditure of that magnitude period, though.

I wish the government, like any other corporation, were forced to liquidate a branch and it's assets, in order to throw large sums of money around like that.
 
[quote name='mykevermin']

There are a number of corpses in Louisiana and Mississippi that learned that lesson that 3 years ago. If only they were white (collar).[/QUOTE]

That's a bit over the top...

As for what you said earlier though, my buddy and I were just talking about how we suddenly have billion upon billions for bail outs but not for the countless other things our country could use. These bailouts are going to end up costing as much as the Iraq War, how can that be a good thing. Even though these "loans" are supposed to help stabilize the economy they 1. doesnt solve the problem of bad management of banks, 2. increases inflation further and 3 just puts off the inevitable crash of the economy (due in large part to #2)
 
[quote name='RAMSTORIA']That's a bit over the top...

As for what you said earlier though, my buddy and I were just talking about how we suddenly have billion upon billions for bail outs but not for the countless other things our country could use. These bailouts are going to end up costing as much as the Iraq War, how can that be a good thing. Even though these "loans" are supposed to help stabilize the economy they 1. doesnt solve the problem of bad management of banks, 2. increases inflation further and 3 just puts off the inevitable crash of the economy (due in large part to #2)[/QUOTE]

Bush just has to hold out into November then Obama takes over. The economy then crashes on his watch and Democrats are forever tagged as "weak on the economy." It's borderline brilliant.
 
[quote name='Msut77']Tchaikovsky was brilliant you twit, fobbing of your philosophies failures onto others? Not so brilliant.[/QUOTE]

Obviously you have no sense of sarcasm if you took what I said seriously.
 
[quote name='dopa345']Bush just has to hold out into November then Obama takes over. The economy then crashes on his watch and Democrats are forever tagged as "weak on the economy." It's borderline brilliant.[/QUOTE]

That's part of the win-win political ideology of the right.

When they do things properly (can't think of a right good example, mind you), they can get re-elected on the idea that they, the Republicans, put good policy in place that had good effects.

When they bumble and fuck up catastrophically, they can say "vote Republican, because government clearly can't help you."
 
[quote name='RAMSTORIA']These bailouts are going to end up costing as much as the Iraq War, how can that be a good thing.[/quote]

I never heard that. I was under the impression that the cost of the bailouts was a fraction of that of the Iraq war.
 
How much has the Iraq war cost now? Over $500 billion?

One....hundred...billion dollars!

(And I'll be damned if I don't think of 1984 every damn time somebody mentions the cost of the Iraq War....)
 
[quote name='SpazX']How much has the Iraq war cost now? Over $500 billion?

One....hundred...billion dollars!

(And I'll be damned if I don't think of 1984 every damn time somebody mentions the cost of the Iraq War....)[/QUOTE]

War shmore. Have you seen how much money the government is throwing around and debt they are incurring in just the last month with the bank and mortgage buyouts?

Freddie Mac and Fannie Mae alone back nearly 5 trillion dollars in mortgages.
 
If these bail outs are only loans, i don't see the big problem. One question though, will the government retain in interest in these companies after the money is repaid? 70% ownership of a company is a sizable amount.
 
[quote name='mykevermin']

I'm against the government buying into companies and giving companies 1.5X what we spend on education each year[/quote]

All the education we could ever ask for is freely available at the Public Library.

Here, let me walk over to my little forth grade buddy Timmy, and read you an excerpt from his history book:

"[FONT=arial, helvetica, sans-serif]The end to the Great Depression came about in 1941 with America's entry into World War II."[/FONT][FONT=arial, helvetica, sans-serif]
[/FONT]
 
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If I may...

1) They are not being given money. They are being loaned up to $85b in order to allow them to meet their short-term cash and liquidity needs.
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Raise your hand if you think the government is going to get back all $85b. Anyone? Bueller?

2) We are not giving them money for free. They have to pay it back within 2 years and at a punitive interest rate of LIBOR + 8.5%. The entire company has been put up as collateral. In addition, the US will be creditor number one so our money will be paid before any other creditor and/or shareholder. We also take 79.9% ownership of the company. Lastly, we are replacing their senior management.
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Nationalization of an industry leader deemed too important to fail is a central theme for socialized systems. Socialism 1, Capitalism 0.
3) The purpose of the rescue package was not to save AIG as a business, but rather to prevent its immediate collapse and the resulting market disruptions. In essence, the plan is to loan them money now and have them pay it off by selling their assets gradually over the next 24 months rather than in the span of 1 week. We’ve basically put them in a controlled bankruptcy that will allow their assets to be liquidated over time.
Click to expand...
That's making some extremely broad assumptions. First, they have assets of meaningful MARKET value. Second, there's a market left in 24 months. Let's not forget, very near $1T has been laid out this week alone. 10 days ago, Paulson was saying all bailouts were unnecessary. That's why we saved Bear, right? To stop the next one?
4) There are some very important reasons why AIG could not simply go bust as so many of you are advocating. The problem with AIG was twofold: 1) they invested their own money quite heavily in financial products whose value has plummeted recently (mortgage-backed securities, etc.) draining them of cash and 2) they are a major play in the credit default swap market.
Click to expand...
English translation: they burned their business to the ground through deals so bad that a high schooler knew something was wrong, but since they dicked it over SO BAD, they need our help.
Credit default swaps, though complicated derivative financial products, are basically insurance you can buy for a piece of debt (i.e. bond) that pays you if the debtor defaults (i.e. stops making their mortgage payments). Their involvement in this market totaled about $440 billion ($65 billion of which was insurance on subprime mortgages).
Click to expand...
What business is AIG in again? Pricing risk, right? Well, it must be so complicated that a peon like me could never understand the ins and outs of insuring pieces of shit bonds so badly done they need to be tranched. What a load.
Their counterparties (buyers of this insurance) were all financial intuitions such as banks. This is where it gets a little more complicated. All banks are leveraged to a certain extent meaning that they have more debt than assets. The assets they hold are not necessarily cash, but a whole host of financial products including bonds, etc. A bond that they have purchased some kind of insurance for is inherently less risky than the same bond without, so it is a more valuable asset.
Click to expand...
English translation: The big houses bought insurance and bought AAA ratings in order to provide the appearance of financial system propriety, which worked spectacularly. When it blew up, AIG remembered that there's more than collecting premium payments.
If AIG went bust (which absolutely would have happened by today had the Fed not stepped in) then all the protection ($440 billion) would disappear and all the banks holding those bonds would suddenly find they had more risky, less valuable assets on their hands.
Click to expand...
And the world keeps on spinnin.
These banks would suddenly have less capital on their books. In order to maintain the proper (sometimes legally required) ratio of capital to debt (in essence their balance sheet) they would have to seek outside capital.
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Capital requirements! Oh that's right! That's why we do that! lulz
AIG is so large that this would extend to nearly every financial institution on the planet, and the progression from AIG bankruptcy to bank write-downs to banks in need of yet more emergency capital would have shaken the global financial system to its core. The problems we are currently facing would be magnified greatly.
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English translation: Socialism 2, Capitalism 0.
This does not mean I agree 100% with the Fed’s actions. Honestly, I would like to have seen some of the major banks put up at least a little of their own cash since this is for their benefit.
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So, what then *does* the person like about it, other than VERY IMPORTANT PEOPLE DID SOMETHING VERY IMPORTANT..?

At the end of the day, the US government should ultimately make a solid return on this action barring any catastrophe.
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Socialism 3, Capitalism 0.

I'm a pretty solid capitalist myself, but I'm having trouble reconciling a philosophy of capitalism with a reality that capitalists will eat themselves and the rest of us with no holds barred because, well, it's profitable.

I am enjoying watching the die hard wall st capitalists trying to explain how this is everything except straight up socialism.

Should something have been done? Sure. I would have nationalized half the banks, killed the investment houses, fully nationalized AIG, F+F, and then started talking about the socialist elephant in the room. Instead, having saved these scumbags, they'll be back in 5-10 years. Hell, Keating is a goddamn saint in comparison.

[quote name='Koggit']Why are you comparing investment and expense?[/QUOTE]
Investment. lulz. Make sure not to step in any of that shit you're shoveling.

This is not a liquidity crisis, despite the bullshitters that would have you believe otherwise. This is a capital crisis. All the little emperors aren't wearing clothes.

And don't forget kids: Bush and Paulson will make it all better. That's why this little provision was slipped into the $700b bill being considered:

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
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I'm sure that despite everything else they touch turning to dog shit, this'll be different... which is why oversight is totally unnecessary and unable to even be considered!

No thanks on the kool-aid, Koggit. I'm already sick from watching everyone else drink it.
 
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Amusing response, I enjoyed reading it but it lacked substance. It boiled down to just another "we should've weathered the storm" which is far, far, far too risky for my tastes
 
[quote name='Koggit']Amusing response, I enjoyed reading it but it lacked substance. It boiled down to just another "we should've weathered the storm" which is far, far, far too risky for my tastes[/QUOTE]
Alrighty then, how about this one: if you were the government, how would you book the transactions that just occurred? Investment, right? How would you grade that security?

I mean, at the very least it makes business sense for the new "American investor" to own a piece, right??
 
It's unfolding like a bad Ludlum novel*.

The neocons want to control everything, they get their puppet prez to take control of just enough red states with a bunch of phony balony religions rhetoric and jingoism, and while they're at it they launch a convenient set of distracting wars propelled by historic events and bad intelligence.

Problem is, they now need to shift gears into socialism and they're in control of the so-called super-capitalist party. Fiscal crisis to the rescue.

All they need now is to figure out how to turn the page on the second amendment...:D

*Edit: On second thought, all Ludlum novels are bad novels
 
This is about to get a whole lot worse.

Seems the logic of the Treasury department now is "well if we are going to help out banks, we should help out foreign banks our big corporations like too".
 
These bastards are willing to bail out every bank in existance, but they couldn't be bother to toss a few dollars to Sega when they were dealing with the Dreamcast. They obviously didn't know how cool the Dreamcast was. I'm pretty sure if Dreamcast was still around and Dreamcast 2 came out, the banks would have been playing them too much to have any time to make bad loans :whistle2:k
 
I find it interesting that our resident cowboy capitalist has been very quiet recently. You'd have thought that this would be the perfect time to defend all of those laissez-faire ideals that got us here.
 
[quote name='Friend of Sonic']These bastards are willing to bail out every bank in existance, but they couldn't be bother to toss a few dollars to Sega when they were dealing with the Dreamcast. They obviously didn't know how cool the Dreamcast was. I'm pretty sure if Dreamcast was still around and Dreamcast 2 came out, the banks would have been playing them too much to have any time to make bad loans :whistle2:k[/QUOTE]
I nominate you to head the Fed.
 
[quote name='mykevermin']Sweet.

SPEND THAT MONEY ON THE WEALTHY, YOU SEXY REPUBLICAN BITCHES! SPEND IT! SPEND IT! SPEND IT![/QUOTE]

Sadly, not just Republican bitches, but Democrat bitches as well...wait until Congress passes this massive bailout bill with support from both parties.
 
OH NOES! SAVE ME BERNANKE! SAVE ME!!!!!!!!


060608bernanke.jpg
 
Food and ammo?

Yes.

Gold.

Only if you're making bullets out of it.

EDIT: Is there going to be a mass suicide of libertarians anywhere? I don't want to die alone.
 
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