Flame Away: I was for the Bail-Out, and I admit it

[Mike 03]

I wasn't on DU at the time, so I didn't post here about it, but I was a reluctant supporter of the "bail-out."

1. It never should have gotten to this point. There is a ton of blame to go around, starting with Alan Greenspan and his warnings in the late 90s, followed by his reckless interest rate cuts, subsequent apologias and justifications for hedge funds, uncontrolled leverage, and his turning a blind eye to the danger of exotic, inexplicable instruments such as collateralized debt obligations and swaps. The rating agencies are to blame for giving AAA ratings to junk, which in turn allayed the fears of those institutions and funds that purchased these ridiculous instruments.

2. Bear Stearns should have been permitted to fail. This might have prevented Lehman's from failing.

3. It was a necessary evil. Had Lehman's and, especially, AIG been allowed to fail, the repercussions would have been felt worldwide. As despicable as AIG is, it's bad paper is everywhere. It is owned by banks the world over.

4. Most importantly, I was grateful that this bomb exploded on Bush's watch. I could see there were ways to paper over this travesty until a new president was in office, and I thought the bail out was a good way to establish responsibility and get things moving forward before a new, hopefully Democratic President took office.

My fear since 2004 has been that this derivatives time bomb would continue to be delayed from exploding by all sorts of manipulations until a new president took office. So I was relieved when it went off on September 15 (or thereabouts).

Having said that, this morning Paulson effectively diverted and trashed his own plan. Now it is a diversionary shell of what it was supposed to be.

So, those of you who opposed it were right.

As of this morning, it looks like this "bail out" was yet another cynical exercise in postponing the inevitable and lubricating the ability of the consumer to consume.

[BootinUp]

1. Do you ever read Krugman in NYT?

I trust his opinion a long ways as he has been very accurate for years on predicting economic stuff. Plus he is just hella smart.

Anyways, I would suggest that the bailout was and is necessary, but the devil is in the details.

[Mike 03]

3. Was Krugman for it? I respect the hell out of that man, but I stopped getting his columns

some time ago.

[BootinUp]

6. His position was that a bailout was necessary

but he wanted several changes to it. He also faults Paulson on the Lehman descision (letting them fail). His column and all the Opinion columns are free access again if you want to go check them out.

[Parche]

16. Paulson let Lehman fail

Because they were in direct competition to Goldman Sachs...notice they got the bailout package

[ContinentalOp]

2. A lot of people here supported the bailout at the time.

It was probably 50/50 so I don't think you're going to get flamed much.

[Mike 03]

5. Thanks. On another thread, there were some bitter comments about those who supported

it and how we lacked courage and would not come forward and admit we were wrong.

[ContinentalOp]

7. Oh, I see the context now. It's all so confusing though.

I initially opposed it but now I think Paulson's new idea is much better. But everyone seems to be getting worked up about it and saying we were duped. So what do I know? :shrug:

[Bucky]

18. Hmmm. Don't confuse "some bitter comments" with a consensus on DU

As DU is not representative of the nation's Democrats, DU postings are not representative of DU members. There's a lot squeaky wheel going on here. Some people will harp on a particular topic frequently enough that you might get a distorted perception. I'm sure most DUers who opposed the bail out are mature enough to recognize that those who supported it had legitimate reasons for thinking differently.

[JonLP24]

9. I don't know about 50/50

I was here all day for that period and the majority was against it. I say about 4-1 here was against it. Now there were many that were for a bailout but a bailout done right, not a sky the falling one. Many here preferred members of congress took there time and create one that works. So I guess you could say 50/50 but many were against the original bailout but weren't against a bailout in general. However anyone should've watched CSPAN the day after the Senate voted for it. Dennis Kucinich, the congresswoman from Illinois, and the congressman from Oregon were working overtime late hours(about 8 pm pacific time) fighting the bailout and if there is anyone you can trust in congress it's those three? I can't remember the names, I believe the one from Illinois was LanDrauie or something similar. I know I misspelled her name badly.

[ContinentalOp]

11. Yeah, you're right.

There were people opposed to any sort of bailout, people who favored Paulson's plan, people who favored Barney Frank's plaen, people who seemed panicky and just thought we should do something, anything. etc. But there definitely wasn't any shortage of debate back and forth. There wasn't really a DU consensus on this issue.

[Hydra]

15. The only reason there wasn't a consensus

Was because the bailout cheerleaders would not stop posting and flaming, and so those of us who called for a better bailout had to finally give up and say "Fine, since no one is listening anyway, we'll let this play out."

really, there were only 10 or so regulars pro-bailout as it stood. What the rest of us wanted to do after the proposed bailout was derailed is up for debate, but the numerical(but not accepted) consensus after the first day was "This is a BAD idea."

[eowyn_of_rohan]

12. 50/50?? Didn't feel like that around here to me - more seemed AGAINST it

But maybe I was ignoring those who were for it since I was so hell bent against it

[ContinentalOp]

17. Maybe you're right.

I think I had the opposite experience. I was so hell bent against it that I only remember all of the people who seemed to be cheerleading it!

[Hydra]

4. Bailout = Armed robbery

It's ok, though- Congress admitted that they passed the bill with 100-1 calls/faxes/emails against. Our support was never needed, just demanded.

[Mike 03]

8. I am curious what the arguments here were at the time.

Maybe a lot of people here saw something that others didn't see. On the other hand, maybe some minds would have been changed had AIG been allowed to fail.

[JonLP24]

10. Check out this thread

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=3517979

That pretty much covers the most of what was going on here at the time.

[Hydra]

13. It's what we weren't seeing that was the problem

Oversight, penalties for stepping out of bounds and solid word of what they wanted to do.

Almost all of the arguments for the bill stated that we had to do SOMETHING/ANYTHING to save the pensions. The problem with that idea is that anyone who has been paying attention for the last 8 years knows that Bushco does nothing that doesn't end up back in their own pocket.

In the end, those of us against wanted more time for the bill(The Railroading being done was telling), and ironclad assurances that the money would be spent in ways that would help the economy and NOT end up in a few crony pockets. We were told that we didn't know what we were talking about. One of the people I admired most on this board ignore-listed me for questioning her support of the bill.

As I said, none of it mattered- Congress overrode their constituents, and the next day we found out that the bailout money would be used to pay bonuses and not make loans. A bad week, all around.

[eowyn_of_rohan]

14. Here are a few more for you

Wed Oct-01
Senate passes 'Financial Markets' (Bailout) Bill 74-25
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=3522021

Thu Sep-25
Lawmakers: Wall Street rescue accord reached
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=3511136

Tue Sep-23
House leader urges Bush to explain bailout on TV
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=3506469#3506477

Tue Sep-23
Cheney, Paulson Head to Hill to Soothe Lawmakers on Bailout
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=3505757

here's another
Sun Sep-21-08
Paulson says foreign banks can use U.S. rescue plan
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=3502389