So what's the worst that would happen if we just say no to any further bailouts?

[MessiahRp]

Give me worst case scenarios?

I just don't buy that if we don't bail out the fatcats that the rest of America will suffer any more than if we don't.

But since I am no economics major, someone please fill me in.

Rp

[jayfish]

1. "Human Sacrifice,...

dogs and cats living together... mass hysteria!" -Dr. Perter Venkman

Jay

[Andy Canuck]

27. Actually it was Tripper Harrison who said that.

[jayfish]

28. It Just Doesn't Matter.

It Just Doesn't Matter.

Jay

[Javaman]

41. You meatball! ;) LOL nt

[Fresh_Start]

2. hundreds of thousands more people become unemployed

effectively doubling the unemployment rate

[closeupready]

45. So, just expand Section 8 Housing Assistance, Food Stamps and Unemployment.

Not an ideal situation, but FAR cheaper than bailing out Wall Street.

[fla nocount]

55. You're too smart for this crowd. n/t

[avaistheone1]

48. Total bullsh*t. Who are these hundreds of thousands of people? What industries are they in? Where

are they located? U.S? India? China?

That is just a scare tactic Bernanke and Paulsen are using. Don't fall for it.

[mikelgb]

3. I can't do much worse than I am doing now

the way I see it:

we, the little people are already fucked...
we will be fucked with the bailout and without

this is all about keeping the rich people rich

[pnwmom]

If you're homeless and in the souplines, then that's true.

If you're a tramp riding the rails, then that's true.

I didn't live through the Depression, and I don't want to. I've heard too many stories from the generation that lived through it.

[Greyhound]

53. So you favor keeping the people that created both that one and this one

in position for GD III?

[pnwmom]

57. What made you draw that conclusion? n/t

[Enrique]

4. global depression

I think it's reasonable to call that a realistic worst-case scenario, based on credible people's assessment of how serious the crisis is.

[MessiahRp]

7. In a case that severe that would affect almost everyone...

wouldn't countries just authorize a re-distribution of wealth that somehow pulled everyone out of such a crisis? i would think that something of that severity might finally be the reason to hit the reset button.

Rp

[Enrique]

12. it could happen that way

but as for me, I'm going to urge my representatives to try to avoid a global depression rather than encourage one.

[Romulox]

24. I doubt that $700 billion is enough cash to stave off a GLOBAL DEPRESSION, one way or another

[Greyhound]

54. See, that;'s the real issue, It's already done, game over.

The $700B is just a last grab on their way out the door. The Ponzi scheme is exposed and it is falling, period. There is nothing the US can do to stop it.

Even if, by some miracle, and miracle it would be, we manage to stave off this round, the wave already exists and it will wash away all that stands before it. The system is broken beyond any repair and no tweak or adjustment will fix it.

Think of a $700,000,000,000 roll of duct tape, we might be able to use it get the car running enough to limp into the next town, but the engine is blown.

[pnwmom]

5. Global depression. Collapse of the international banking system.

Millions of retirees with no assets. Millions of workers with no jobs.

The Great Depression lasted for ten years.

[ixion]

6. It's like check kiting...

have you ever done that? You have two bank accounts, and you 'kite' money back and forth between the accounts, both of which are actually over-drawn. You write checks for a few bucks more each time, in order to get money you don't really have. If you miss a deposit, or don't stop the kite after a few days, the wheels come off and you wind up owning the banks a small fortune in over-draft fees.

This is, in essence, what is going on. We don't have any money of our own left. We borrow money DAILY to stay solvent. Adding a trillion dollars+ to our 'kite' will most certainly make a bad situation worse.

The solution is to stop the kite (going on for 40 years now) and take the hit that we eventually have to take for playing that game in the first place.

Does that make sense? It's gong to be painful, but the only way to correct this bad situation is to let it play out, rather than pumping money into it, which will actually make it worse.

It makes it worse because we increase our debt load, and devalue the dollar further, thus pissing off those who bank roll us on a daily basis.

[MessiahRp]

9. That explanation helps...

Everyone is in a fear of another great depression or worse a global one, but I'm not sure even with a bailout that we're not going to see these same effects. We're only bailing out the rich assholes who created most of this mess, not the people on the bottom who are losing their jobs and homes daily anyway.

Rp

[ixion]

14. yeah, it's not going to be pretty either way...

because it's not really a "bailout". That would imply that giving these idiots a trillion bucks would solve the problem, which it most certainly will not. It simply buys more time before the REAL inevitability: the bankruptcy of the US.

[bdamomma]

35. would I be to flippant to say this is just a scam

again to screw us again. And give the rich man more money, I would love to see them survive without it.

[ixion]

47. not flippant at all

that's just exactly what's going on.

[earthside]

13. Ten Years? Or Generations?

Add trillions of dollars to the federal debt with this bailout plan and we will have generations of Americans doing nothing but sending their taxes to Uncle Sam to pay the interest.

No health care reform, no Department of Education, no FDA, no EPA, etc.

We can take our lumps now, or we can permanently doom ourselves to third world status.

[ixion]

16. yep, and thus far it looks like we're choosing the latter

I'm sad to say. :(

[Fleshdancer]

21. Thank you so much for this post

I almost gave up trying to understand this mess. Your post was extremely helpful.

[ixion]

46. sure thing...

glad it helped! :hi:

[Romulox]

25. Another metaphor: we are just "kicking the can down the road" with this bailout

If the American economy is "overleveraged", a trillion dollar bailout of Wall Street is merely a shifting of this crippling debt on future generations of taxpayers.

But hey! At least there will be bonus checks on Wall Street this Xmas! :puke:

[wiggs]

39. Isn't there plenty of money out there? Isn't that one reason why gold has gone

up because stock money is fleeing to gold and to oil? A lot of corporations are buying back their own stock...doesn't that say there's money out there?

I thought one of the problems is that lenders are hesitant to loan the money they have, and insurance companies are extremely hesitant or unable to insure deals and loan package or float bonds for projects. Wouldn't higher interest rates and more potential profit solve both those issues?

Keeping people in their homes is a different issue....

I don't know a lot about this stuff but the more I hear the more skeptical I am about a rush to bail.

[ixion]

49. money (dollars) and gold are not the same thing...that's the heart of the problem

when we went off the gold standard, we were essentially saying: "this piece of paper now has value because the US Gov't says so", rather than saying: "this dollar represents x amount of universal units."

This, in essence, pegged the value of the dollar to the value of our nation.

Now that our nation is 9+ and climbing in debt, those paper dollars are becoming more and more worthless. This is coupled with the fact that the Fed continues to print money -- creating it out of thin air -- which adds to the deflation.

There's plenty of money out there, it just so happens that it's dropping in value as we speak.

[Greyhound]

56. While most people were blissfully dreaming about their own chance at

winning the lottery, they failed to notice that the entire global economy has been concerted to fiat currency, it is based on nothing but a collective, "because we say so".

So yes, there is a lot of "money" out there, but we've reached the point where that money has no value because people are realizing that "because we say so" means nothing.

[HamdenRice]

8. You won't be able to cash or deposit your paycheck or use an ATM to get cash

We came very close to that last Thursday and have been on the brink since.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4057340

"DemocracyNow: System of payments stopped working last week; you'd have to buy groceries with gold"

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4027506

"How your cashing a check is related to the current credit catastrophe"



If that happens, good luck trying to buy groceries or gas.

Next, the commercial paper market comes to a standstill. That also happened last week. Commercial paper is a huge market of short term loans that businesses use for inventories, paychecks and other short term needs.

You will be laid off almost immediately if you presently have a job with a company.

Medium term, banks stop lending to businesses and homeowners. There will be almost zero turnover in the housing market. Btw, here in NYC as a result of racist redlining, banks refused to lend in central Brookly, Harlem and the South Bronx for about 10 years. Those burned out hulks of buildings that characterized the era -- that would be nation wide.

Presumably the "let it crash" contingent have hoards of gold because they don't seem to care about how they will feed themselves or their families.

[On the Road]

10. Just Read About the Great Depression

That's what happens with all the banks start failing. Nothing that any of us under 70 has experienced resembles it in the least.

[HamdenRice]

15. My mother was hungry for years

Even though her father was mostly employed, because with high employment and wage deflation, wages were so low.

They ate day old bread that was thrown out by the local grocer cooked with rotten tomatoes.

My father was growing up on a tobacco farm owned by his parents. After commoditie prices collapsed, the tobacco company offered them $5 for the entire crop, rather than around $100.

No new shoes, clothing or other purchased items except paying to have the corn ground and salt from Farmville, for five or six years. Fortunately they ate because they were on a farm.

This is what some DUers seem to look forward to. Yup unless one is over the age of 70 or have had long talks with people over 70, one doesn't have a clue.

[MessiahRp]

19. I don't wish for any of that

I just am trying to figure out how a bailout helps everyone since it seems so targeted to help only the richest of the rich.

I think after witnessing a lot of the Disaster Capitalism of the Bush Era take us governmentally so far to the right people want to use the same concept to pull it back and if anything socialize a lot of the more unstable-in-the-hands-of-private-corporation projects.

I just want to make sure the bottom is as accounted for as the top and they are nowhere to be found in any bills I have heard of thusfar.

Your post about the ATMs and Check Cashing was brilliant BTW. I will definitely be bookmarking and spreading that around for friends to read.

Thanks,
Rp

[leftofcool]

23. Exactly

Both my parents suffered through the depression. Fortunately, their parents were farmers and that helped some but they went hungry many nights.

[dana_b]

38. I'm with you

I don't wish this on ANYONE. Well, maybe the fools who got us into this mess. Hwever my grandparnets went through the Depression and until the day my grandma died, she horded food and clothes. Her pantry and second refrigerator were bursting with food because she still had that fear of going without even after 50+ years. She didn't like to talk about her experiences though - I think it was too much for her.

[On the Road]

11. dupe

[JVS]

17. Fire and brimstone falling from the sky!

[OHdem10]

18. At the core of the problem. Our country runs on credit. The brokerage

houses are in such dire straights they cannot lend or borrow from
each other. If the banks start failing, the smallest of small businesss
cannot get a loan to keep running. Individuals cannot borrow.

Credit is frozen. Our country does not function.

[Vanje]

40. There are still some banks in good shape

Wells Fargo, and others.
Wont these still ba making loans?

Granted, sub-prime loans will be done, but thats okay, no?

[MadHound]

20. Oh, it would be another Great Depression, certainly

The trouble is, this bailout is the worst alternative. If this goes through, we can expect that our US Treasury Bonds, the instrument of servicing our debt, get downgraded. That means no more government borrowing period. Furthermore, with a downgrading in our bonds, we could very well see big holders like China and Saudi Arabia starting to sell them, worsening our economic situation further.

Then there's the matter of inflation, or to better put it, hyperinflation. Already we're seeing the value of the dollar drop just on the threat of a bailout. If a bailout occurs, the confidence in the market is going to slide even further, the value of the dollar will drop even more and severe inflation will set. Not to mention the economic basics at work here, if you inject one trillion dollars of liquidity into the system, the value of the dollar drops even more and ratchets up inflation even further. There will also be the severe temptation for the government to print its way out of debt. Can you say post WWI German hyperinflation? Have your wheelbarrows ready.

All of this will combine to create a perfect economic storm that will not only sweep away our economy, but our government and country as well. It will be much worse than the Great Depression, and much worse if we simply do nothing. This is Bushboy's last present to the country, and we shouldn't open it. Besides, there's a great argument for this bailout not even being Constitutional.

Yes, if we fail to go through with this bailout plan, it could very well trigger another Great Depression. However the alternative will trigger a scenario that is much more devestating. We simply shouldn't go there. Besides, there are some benefits to a large depression, it would see the ones responsible for this mess go belly up, it would cull the weakest players from the market, it would bring about much stricter regulation in the aftermath, and the government would be forced to spend money on the real economy, where the most people would see the benefit rather than simply bailing out the rich and well off.

We're not in a good position here, but the fact that we're not in a good position shouldn't be allowed to stampede the country into a much worse position. That's what this bailout is, a much worse position, and we really shouldn't go there. Let Wall Street fail, yes, the consequences will be harsh, but less harsh than if we do go through with the bailout. And afterwards we'll have the opportunity to clean up the mess and set things right.

[leftofcool]

22. thousand more unemployed, lost retirement, lost pensions

pick yer poison

[Romulox]

29. "thousand"? MICHIGAN HAS LOST OVER 300,000 JOBS SINCE 2000. Nobody thought that was a "crisis"

:eyes:

[kentuck]

26. A lot of bullshit...

Most banks are in very good shape. Especially the ones that have been regulated. These investment banks and their special creations have created a problem for a lot people. But the world will not end. It's just that a lot of people, like Hank Paulson, will lose a lot of money if we don't bail them out. Also, most 401K's will lose money - especially the ones whose employer has invested in AIG and Merrill Lynch, etc. But that is the way the ball bounces. However, the panic is uncalled for, in my opinion. And you know what my opinion is worth? Absolutely nothing.

[Vanje]

33. Competition

There are banks (Like Wells Fargo) that didnt partake in "complex financial instruments".
If the greedsters go out of business, wont that just allow the solvent banks to step into the void ?

Even in the "liquidity crisis", there are still banks that make sensible loans. Let these banks take over the stupid greedy bastad banks.

Whats wrong with that?

[kentuck]

42. I think that is what would happen if they did nothing...

I simply do not buy the explanations about the necessity for the bailout.

[LSK]

30. forget cashing checks

Cash and gold would be the only things that would buy anything.

[kentuck]

31. Most commercial banks are in good shape....

and are not in the same condition as the investment banks.

[LSK]

36. no, all banks rely on MBS to back up interbanking borrowing

However now they are not sure which MBS are legit and which are bad.

[kenny blankenship]

32. I am opposed to bailing out wall st. without major reforms (basically seizing the banks). However-

if you think collapse on wall st will not affect you, you are in for the surprise of your life.

How bad could it get? Read about Germany under hyperinflation. Read about Argentina after hyperinflation and default. (here check this out:
http://www.pbs.org/wnet/wideangle/shows/argentina/photo.htm) That could happen here if the bailout plan fails in a cycle of reinflate, collapse, rinse, repeat, -hell, it could still happen even if the plan works. If on the other hand "runs" on deposits begin and the banks start to collapse domino style early in the reinflation phase, the country (and world probably) will go into a deflationary death spiral. Money in the form of credit just silently vanishes by the hundreds of billions, businesses cannot obtain loans to continue operation and so they cut workers from their payrolls, hence more workers and businesses default on their loans, causing still more credit to go to money heaven, depleting the capital from which banks can make loans, causing still more contractions in business activity and payrolls, which again depletes the capital available in the system. Month after month thousands of people lose their jobs, without hope of getting new ones; thousands of unemployed become millions, and general desperation sets in for broad swathes of the population. Basic infrastructure you count on every day to make civilization possible and pleasant like electrical service also starts to fray, and sometimes and in some places it can break down altogether.

America is in for some hard times if the plan succeeds, apocalyptic times if it --or some alternate plan---does not. It will be much harder to rebuild this country if it goes through a period of total breakdown of its financial foundations, than if those foundations are kept in place but reformed.

[MessiahRp]

43. This will affect all banks? Even the more responsible ones that are doing fine right now?

The purpose of my post was to get a variety of opinions and hopefully form some consensus opinion on this because while I know where the blame lies, I am not sure what, if anything, can fix this. Especially a Bush-backed bailout.

Rp

[kenny blankenship]

44. The crisis is systemic. There are more responsible banks, but none are doing so well

that they can survive and function through the total destruction of the credit derivatives markets, which is not just at hand but has been waiting for us in the lobby since last week. Had AIG not received its emergency bailout 7 days ago we would be speaking of "more responsible banks" in the past tense.

If banks need public assistance now just to survive the results of their own excesses and aversion to holding adequate reserves, the terms of their existence and role within society must change. For us to insist on less is to willingly accept debt slavery as the immutable natural order of things for ourselves and posterity. When the supposed "Master" of global capitalism has shown himself to be as incompetent at running his affairs as the average crackhead or compulsive gambler, only his threat to blow up the planet unless paid off remains as persuasion. This I refuse.

[Vanje]

34. dupe

[BraneMatter]

37. Uh...

the trillions get spent on the people instead of given to the robber barons???

You nailed it. Why in god's name would anyone in their right mind believe Bush and Paulson, and the crooks who caused the mess in the first place???

"I robbed you. Give me more money so I can rob you again."

"Oh, ok. Thanks for robbing me."

[Geek_Girl]

50. The difference between bailing out the corporations or not bailing out the corporations is

Bail out: folks will be standing in line for the soup kitchen

No Bail out: folks will be standing in line for the soup kitchen along with the Ceo's who made this mess.


That's the difference.

[ShortnFiery]

51. Then dammit, let's vote out ALL who pass this shitty legislation?!?

[Greyhound]

52. The worst of all possible futures, it would forceus to choose between starvation and socialism!

Unemployment would skyrocket and the nation would learn just how many people do nothing, make nothing, create nothing, and contribute nothing. All real assets would escalate in value while the imagined assets like savings and retirement would disappear. We would quickly learn why they stopped publishing the M3.

Craftsmanship would become a premium again, technical knowledge, especially engineering, would be highly prized, local governments would once again have to govern, the DoD would cease to exists as all major corporations could no longer exist. Energy assets would have to be taken back from the parasites that control them in order to continue essential distribution of food and goods. There would be death and chaos, but unlike now, there would be no mechanism in place to hide it, it would be right out there in the open.

An entirely new currency system would have to be implemented, fortunately we already have an effective model and implementation could be carried out in a few weeks.

And worst of all, the facades of "respectability" would fall and we would be forced to see ourselves for what we are.

[Marie26]

59. Never heard about the M3 before

Scary stuff. So the Fed stopped publishing the M3 in order to cook the books & hide the real inflation rate? The only analogy I can think of is Enron. The US has become Enron - a giant Ponzi scheme based on speculation, corruption & falsified reports.


Goodbye M3- What is the Government hiding? - http://inflationdata.com/inflation/Inflation_Articles/M3_Money_supply.asp

[TexasObserver]

58. It won't be any worse than the market after October 1987.

There is a sea of bad debt, and pretending the US government can fund it away is a fool's errand.