I second the shitshow

Everything I learned in school has gone to shit...what happened to the 6% market risk premium?!

I'm shocked that the bill failed after working on it for over a week. I guess all that talk of "bi-partisan cooperation" simply couldn't get it done.

damn, what's the next bank to go bankrupt.

to be fair, the bill was put to get very quickly and wasn't fully explained to the public. many people disapproved it, a lot of the midwest, south ...

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http://bankertimes.com
investment banking news

True. I don't think that the public understood what a collapse on Wall St. would mean for the economy as a whole. Congress now has nothing to show for its hype and hustle, except that that it is too divided to quickly handle crises such as these.

Congress totally dropped the ball on this one. In the name of "protecting taxpayers" they totally screwed anybody invested in the market.

This thing should have been explained to the public as an asset purchase, rather than a bail out. It also should have been made clear that this is a solution for a national problem - not a wall street problem.

STill, the average person struggles to understand that a dollar in someone else's pocket now may benefit him in the future.

There is a fatal flaw in our political system. Decision makers look out for their constituency's short term interests rather than the nation's long term interests.

I wish this thing had happened after the elections.

concerned about job? haha how about the bigger picture
i thought there was a circuit breaker somewhere?

Shit.............

Any takers on sub 10,000 for the week?

My graduation plan had changed to moving back in with my parents in California come December. At least I'll enjoy the weather short-term, maybe become a hippie long-term. 4.5 years of college down the drain. Cheers.

Never underestimate the stupidity of the American people

Fucking House Republicans....

Dealbreaker with a Rollcall of votes on Bailout.

http://dealbreaker.com/images/thumbs/bailout.rollcall.0929.pdf

Except for the people who went broke assuming that Wall Street was smart enough to not over leverage itself.

Another frustrating thing is that by keeping the $700B bill from passing, Congress sent fear into the markets and the DOW fell by 777 points. Overall investors lost over $1 Trillion dollars today in the markets. So what's better, $700 billion that could actually turn out to make the taxpayers money over time, or a $1 Trillion loss?

"Dem fuckin Wall Street types want ma munny to save d' economay? Wut da hell? They cud kiss mah ass, 'n join dem L-qaidars in hell"

the house republicans really amaze me - they basically just handed the election to obama by failing to deliver on this vote.

Blame the Republicans? I'm not a fan of either party, but 2/5ths of the Dems voted No on this. If anything, this rejection looks terrible on those that voted for it. It was a terrible piece of legislation. With the way all of Washington has treated the whole thing as a political bullet instead of a real problem, I implore everybody to vote every one of these clowns out of office.

I'm surprised this group, who thrives on the free market, is so for a government run program like this. Let it burn. You wanna be mad at someone, be mad at the Fed for allowing banks to over-leverage themselves while allowing money to be dirt cheap.

I agree with you Virgina Tech 4ever,

This legislation is toilet paper

The people on this board are frikin retards, who have nothing else to do, but hang around with the American public, whom they apparently call stupid

Use your brains for once and stop ranting!

george W.ANKER bush - worst fkg president ever. he used up his political change on the war and now he couldnt round up a fkg silver quarter.

as to the bailout being a disaster, where have you guys been? to suggest not passing this has been a nasty death sentence on WSO for the last week or so. call me a hypocrite, but i was not opposed to this bill passing given the adjustments that had been made. still as ive said before, this whole showdown is akin to the banks holding a remote detonator and telling washington, if you dont help us we keep the financial system hostage and eventually blow ourselves and everyone else up. in this situation, clearly the government needs to do something and i would have settled with the bill as the lesser of evils.

my hypocrisy is, i just dont really think this bill is designed effectively to do what the administration claims. there is nothing in here guaranteeing that after these assets are purchased, banks will not continue to hoard liquidity. clearly we need to do something else in concert. the obvious wall street problem is trust. how do you address issues of trust? transparency. where is the push from the government to redefine and magnify it? also, i think we need to focus in on recapitalization. bernanke claims to be a scholar of the great depression. he should broaden his scope internationally and see that recapitalization by public equity was the leading factor in the more successful banking recoveries across the globe (eg sweeden). i think paulson backed him into a corner with a silver tongued dire scenario and he folded the same way i did that something was better than nothing. now i do believe that there is a significant risk to the financial system, but i think it is grossly over exaggerated. and i think it is disingenuous to claim that this bill largely benefits main street in order to push it through. to all challengers of that view, please add DETAIL to your claims of opposition. the last problem ill mention with this bill is that it doesnt address the root cause of the housing problem which is the continuing increase of foreclosures across the country due to bad loans. if youre willing to sacrifice for the good of the financial system - sacrifice for this root cause. if this is not addressed and these mortgages continue to deteriorate and affect neighboring assets, the cycle continues and well be back for another $700b later on.

ill stop there cause i know what a short attention span we all have.

actually one more thing, slightly off topic - if you think the dow drop was catastrophic, please review your market history and your investment objectives. it is irresponsible of the news to report it as the worst point drop in dow history without also mentioning that it doesnt even make the top 10 in terms of percentage loss. and your 401k, which is the vehicle the majority of middle america uses to invest in the stock market should have a at least 15+ year horizon. in which case there is no need to panic, there is sufficient time for recovery. and if youre well off enough to be playing w/ stocks and got burned you should know the risks. if you couldnt afford it? a fool and his money....

signing off.

I didn't read all of wintonheights's post, but, from mlamb's excerpt, it seems as if winston is another 65th, which is the problem with this country [and why the bill didn't get passed]... there are so many 65ths out there who have no idea wtf is going on, so they completely misunderstand how this thing works.

i agreed there is a significant risk to the financial system, did i not? what i said was i believe it is over exaggerated in DIRECT connection with this bill. just because we need to do something does not mean we should do anything. and the reality is, if this bill is passed the next market hesitation will be over when the details will be worked out and into action and then whether or not the bill will even be effective. see, wall street by nature is shortsighted. the government needs to act quick but not in haste. the markets have waited. they can wait for a better solution. nobodys talking inactivity here.

and as i said above, this bill most certainly should not be characterized as "bailout of mainstreet" either. it is clear whos getting the immediate benefit here and thats why it was characterized as it was. long term benefactors maybe be more widely diverse, i agree, but dont kid yourself, this "rescue plan" WILL NOT stop the broader economy from going into a recession and any main street benefit from it is surely residual - save us, so we can loan to credit worthy customers/businesses again and restore profits. yay! wait, what?

so save me the "slow our economy bit". the pain is here to stay. DEAL WITH IT. i have mentioned what i believe are other measures that are better at making this less severe or should at least be included in combination. those are my thoughts. in addition the government should stay out of the way of the free markets and go back to being THE LAST resort. if it intervenes it, should be do what it did w/ bear, wamu and Wachovia, be proactive. use its mighty hand to broker deals that consolidate the industry well before it collapses (they have to get better terms and take on less risk tho. geez). it should preside over the orderly dissolution of insolvent companies so there isnt panic. it should reassure the public that its savings and 401ks are safe. and it should force more transparency into the system by investigating all the financial institutions and make their findings public. or temporarily suspend or adjust certain accounting rules for illquid assets. or temporarily suspend all companies from paying dividends. or hell, locking all the heads of banks into a room and not letting them out until they come up with a solution to HELP THEMSELVES. these are things the government has historically been better at doing rather than being an investor in assets it knows nothing about compared to the sellers (ever heard of asymmetric information?).

to be fair though, i actually do agree with you that it is/was irresponsible of the news to report this as a "bailout of wall street", but more irresponsible? im guessing that was just for arguments sake. ill ignore it. "rescue plan" would have been sufficient. but dont kid yourself there would still have been opponents and proponents. now, if youre asking whether or not the american people would have gotten involved enough to intelligently question the bill under than scenario? well thats another story. my guess is it probably would have sneaked through. i mean it almost did yesterday against overwhelming public backlash.

lastly, dont attempt to oversimplify this. IT IS NOT basic economics, otherwise the solution would be in that macro textbook at the back of your shelf you havent read in the last couple of years. and wed be well on our way to recovery.

I really can't think of a more appropriate time where the "last resort" concept applies. Look at the roster of failed institutions: Bear Stearns, Lehman Brothers, Fannie/Freddie, AIG, WaMu, Wachovia, and Merrill (to a certain extent). Nevermind the fact that many of these occurred within days. The market is in a complete state of panic and systemic risk is dangerously high. The LIBOR-OIS spread is at its highest level ever.

I am not one for reckless government spending; however, I firmly believe something needs to be done in the near term to avoid additional stress to the financial markets. Paulson's plan is the best idea we have right now.

looks like we agree more than i originally thought. what makes this whole situation so incredibly complex is the fact that there's so many different parties to blame: wall street bankers for selling toxic securities and abusing leverage, mortgage bankers for writing subprime loans, homeowners for piling on debt and living above their means, regulators for failing to adequately Monitor the industry, rating agencies for slapping "investment grade" on risky securities, the fed for pumping too much money into the market after 9/11 ... the list goes on and on.

everyone knows something needs to be done - both to avert further damage to the financial system and to mitigate the risk of this happening again in the future (although bubbles will always exist). unfortunately, no one has come up with a solution(s) that addresses all these issues yet.

700 billion, with leverage of 10:1 will add $70b of equity to the banks if the assets are bought at current prices. Lets say the Fed gives the banks 30% premium for the illiquid assets, increasing the banks equity by $210 + $70 = roughly $300 billion.

If you add up all the equity of all the banks in the US, its $1.3 trillion. So my question is that will the $700 billion be enough?

The objective is to free up the credit market, and there is no way to find out what these assets are worth. The 30% assumption is merely an example, could it be the average of last 10 years?