But Paulson is clearly out of his depth. He’s just not the man to deal with a crisis of this magnitude. His only interest is bailing out his friends in the banking industry. The interests of workers and consumers are just brushed aside. Has anyone from the Dept of the Treasury (or the Fed) suggested a bailout for the 14,000 Bear Stearns employees who lost not only their jobs but the entire retirement when the company was purchased by JP Morgan?

http://elainemeinelsupkis.typepad.com/money_matters/2008/03/the-fed-is-just.html

“If anything goes awry, these dominos fall very fast,” said Charles R. Morris, a former banker who tells the story of the crisis in a new book, “The Trillion Dollar Meltdown.”

This toxic combination — the ubiquity of bad investments and their potential to mushroom — has shocked Wall Street into a state of deep conservatism. The soundness of any investment firm depends largely on other firms having confidence that it has real assets standing behind its bets. So firms are now hoarding cash instead of lending it, until they understand how bad the housing crash will become and how exposed to it they are. Any institution that seems to have a high-risk portfolio, regardless of whether it has enough assets to support the portfolio, faces the double whammy of investors demanding their money back and lenders shutting the door in their face. Goodbye, Bear Stearns.

The conservatism has gone so far that it’s affecting many solid would-be borrowers, which, in turn, is hurting the broader economy and aggravating Wall Streets fears. A recession could cause credit card loans and other forms of debt, some of which were also based on overexuberance, to start going bad as well.

Many economists, on the right and the left, now argue that the only solution is for the federal government to step in and buy some of the unwanted debt, as the Fed began doing last weekend. This is called a bailout, and there is no doubt that giving a handout to Wall Street lenders or foolish home buyers — as opposed to, say, laid-off factory workers — is deeply distasteful. At this point, though, the alternative may be worse.

http://www.nytimes.com/2008/03/19/business/19leonhardt.html

I like this law, and would be in favor of its passage. Unfortunately, the Fed doesn’t make law.

Nope. But they can certainly condition a bailout on agreement to increased regulations–those regulations being imposed by regulatory bodies such as the SEC, not by the Fed–effective immediately.

Oh, and I’d like to amend my horsewhipping bill to include anyone who whines about Sarbanes-Oxley.

Every man
Every man for himself
Every man, every man
For himself.

All in favor say aye.

Big Science, halleluja!
Big Science.
Yodellehe
Hoo…

If you feel all Wall St is one, I can understand your complaint. If, as I do, it’s an ecosytem, then the Fed did pretty well here. ”

Paulson is ex-Lehman Brother guy, bailing out BSC by giving JPM free money and taking on the bad loan responsibility and move it to government tab.

It’s the transfer of responsibility to tax-payer that is dubious. So what if the entire wallstreet ecosystem go bust? So what if BSC go bankrupt and bunch of super rich guys lost seberal billions bucks and cascade to several banks. BIG friggin deal. Let them all die and buy the pieces on the cheap.

eg. I want to know why the government didn’t seize the midtown office and auction it off?

Or why didn’t we government nationalize citibank instead of bailing them out? Turn it into Credit Union for all I care. Make it go bankrupt and sell the pieces to the highest bidder.

Hey, I bet it creates more job that way.

My question. What is so important about saving BSC/the functioning of market bullshit that is so important?

Not that it has any effect on me or anything. pull all my stash out long time ago.

I doubt we can see eye-to-eye on this issue because I look at it in terms of punishing the individual actors (BSC) while you seem to see it in terms of bailing out the system (Wall St.)

I see the money lost as already put on the taxpayers’ tab, you see it as recoverable.

To take one example, the strange option-to-buy on BSC’s office. I see this as a pretty severe fuck-you from the Fed to BSC: if they fight being put out of business, they get evicted in 30 days and are basically dead. A pretty unsubtle hint to not look at alternative saviors.

If you feel all Wall St is one, I can understand your complaint. If, as I do, it’s an ecosytem, then the Fed did pretty well here.

Pass a law stating that any person directly or indirectly involved in the financial sector who, ever again, whines about “government interference” or objects to the government bailing out consumers because “it interferes with the free market”, will be horsewhipped from one end of Wall Street to the other.

I like this law, and would be in favor of its passage. Unfortunately, the Fed doesn’t make law.

The Fed is stuck doing damage control. They horsewhipped BSC as much as they could, but that only amounted to taking away most of the money of the owners.

Most of the people involved in big time American “capitalism” wouldn’t be caught dead in a Cadillac.

Now an Italian exotic, a Maybach, a V12 Mercedes, or more likely a limousine - that’s more like it. If it’s a Cadillac stretch limo, that would be okay…