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Teetering on the brink of the new Depression
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Edited Sep 23, 2008, 17:24
Re: Teetering on the brink of the new Depression
Sep 23, 2008, 17:19
grufty jim wrote:


To me, if public money is to be spent, it should be spent paying off those mortgages so that people retain possession of their homes. Instead it's being given to the large institutions in order to keep them afloat, meaning that repossessions will continue apace. It is the ultimate expression of capital protecting its own at the expense of the people..


This wouldnt work, would take too long (the market would *poof* vanish in the meantime), would cost even more, and would put even more money into the pockets of those responsible. They are paying cents on the dollar for these debts after all. Arguably, as the govt will hold the debt it's the govt that will control the repayments/forclosure rate amounting to the same end game. Albeit controlling it through several layers of abstraction.

The bail out is shit, no argument there, but there is now absolutely no alternative. As I guessed/predicted earlier in this thread Investment banking is now over, gone, and it may never return. This is a good thing, and the source of much rejoicing as far as I'm concerned. Deregulation always just meant reregulation, and painful as it is to admit the seeds of this crap seem to be in the sorta social engineering of Clinton/Reno by pretty much encouraging banks to loan to people who could never afford it. That and artificially holding down interest rates (fed discount), and of course the new debt market system, sprung up out of it and, compounded it all.

I am a socialist, but I don't see this nationalising of the debt to be much of a socialist act in itself. Now, how the govt (or more importantly the next one coming in) use this new debt power to leverage and control the market could lead to some socialist financial policies. But I doubt it. It is important though for all this to have more oversight than Paulson and whoever else he choses to recruit.

An aside: Morgan Stanley is the clown of the debacle though, they've been entertaining me since this started, from inviting CIC (china) to own them to bidding to manage the bailout. Ha. What cards they are. They seriously suggested managing the money that will be used to bail them out and then bill the US people for it. That would have been special.
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