" I don't know if I agree about your point that there is not enough money. Some economists have written that our problems are partly due to TOO MUCH money out there. That's what happened to the oil commodities and drove up the price.

Everyone is waiting for the market to find the bottom. At that point you better get out of the way or you will get stampeded by people trying to buy... "

" Just what exactly is the value of something nobody wants?

That's the problem. What is the value of phantom assets, like credit default swaps, or companies that produce no tangible goods nor services?

How much is your home worth? To you, or to a potential buyer?

Some of the value of Americans' "investments" will not be realized for years or decades, if at all. And we're in for a tailspin, as more people lose their jobs, as more people have to pay cash for their goods and services--or don't buy at all.

There's nothing left to stir in the pot! Average folks, it turns out, CAN'T afford every luxury known to man! And so the economy has to collapse, like a bad souffle.

But, let's not forget, MOST homeowners are NOT going to default on their loans, and there ARE excellent investments out there, businesses that are financially responsible and produce vital g/s that people need and will continue to purchase.

It's going to be painful, either way, is all I'm saying. We're paying now for all our excesses. Hope we all learn something from this--you CAN'T get something for nothing. "

" Because the Federal Reserve, Dept. of the Treasury and the Security and Exchange Commission have proved in adequate as institutions dealing with a modern global economy look for the beginnings of a new institution to manage predicaments such as the one we now face. Government will need to take a more proactive roll in the economy.

When all the finger pointing by the political gas class is done real solutions to real world problems will have to be found. Financial mechanisms will need to be monitored more closely and regulation will have to be stringently enforced without inhibiting the flexibility necessary to carry on trade and promote innovation.

All the crying about executive pay and greedy Wall Streeters or Freddy and Fanny political contributions is scapegoating make you feel good because it sounds good populism. There is a systemic modern economic problem that cannot be allowed to continue with out some form of control or watchdog function.

For over a year we have been watching the slow slide of housing values without realizing that in many instances they were over valued and over built in the first place. HUD failed miserably and the factor of cronyism played an important part there. Outside of that the investment banking packaging of poor loans was not well-supervised or regulated and spread blindness and poor risk across the globe. Inventive financing led to propping up demand and ignored the role scarcity plays in the market place.

We will need mechanisms that enable us to act quickly in a local as well as in a global manner to cope with worldwide failures directly affecting our well-being. The jury-rigged system we have enjoyed since the end of WWII will not suffice. "

" For a good assessment of the current problems and offering excellent insight I would recomend you read a man I consier one of the prime reasons for the Election of Ronald Reagan, one Paul Volcker.

He has a very informative address to the Economic Club of New York. The following is a partial quote.

"Until the New York crisis, the country had been free from any sense of financial crisis for more than 40 years. In contrast, today’s financial crisis is the culmination, as I count them, of at least five serious breakdowns of systemic significance in the past 25 years – on the average one every five years. Warning enough that something rather basic is amiss.
Over that time, we have moved from a commercial bank centered, highly regulated financial system, to an enormously more complicated and highly engineered system. Today, much of the financial intermediation takes place in markets beyond effective official oversight and supervision, all enveloped in unknown trillions of derivative instruments. It has been a highly profitable business, with finance accounting recently for 35 to 40 percent of all corporate profits.
It is hard to argue that the new system has brought exceptional benefits to the economy generally".

I found this by clicking on foot note 8 in Wikipedia. if I can say that. Some times the blowgosphere is surprisingly useful and informative. "

" Kevin, as far as there not being enough money that is what I read. The problem is that most of the big financial houses are part of the problem. There are few major money people with independent money like Buffet that can throw something at this, at least not enough.

Beyond that, right now the credit markets between banks are frozen and letters of credit are starting to freeze up, which will shut down importing and exporting and lead to world wide depression.

What it means is that someone shipping a good to another country won't ship it because they don't trust the person buying its bank that the person shipping is getting credit from to send it.

The banking markets have failed and the government has to step in or the world economy will melt down. And the world wide governments will have to work together to handle this, which is why the G7 meetings were so important today.

I am finally starting to get my bearings in all this, and I can see that the solution to so many of the problems we are facing, whether that be Iran or this banking crisis, is going to depend on alliances between countries.

It is the breakdown of alliances, civility between people, countries, and an everyone for themselves mentality that is a key central ingredient in all of this. "

" The real problem remains unaddressed in this bailout….the individual homeowner trying to hang on to their home ….all the rationalized jingo on this planet won’t change the fact that the mess resulted from political pandering …..

The financial ‘houses’ tumbled as the consequence of Freddie and Fannie selling junk paper to Wall Street pals, guaranteed by us. It’s not even being disputed that both institutions peddling the junk paper ‘managed’ as Democrat appointees. But for a lone exception, key management positions within the other tumbling dominos where either registered Democrat or their financial supporters ‘contributing’ tens of millions in Democrat coffers. Democrat legislation sowed the seeds of this financial meltdown, originally the Carter Administration‘s effort at Social Engineering, then grossly expanded by the Clinton Administration allowing monies to be lent to ‘applicants,’ ‘applicants’ in the broadest context, without any ability to repay, without income verification, employment history, credit worthiness… up to 100% of the purchase, and 125% of the appraised value when refinancing. ‘Applicants’ put zero down…obtained grossly inflated appraisals within weeks, refinanced 125% of the inflated value and walked away without making a payment, thousands did it creating a new class of ‘no income millionaires‘…and House Democrats still refuse returning millions they took…which is part of the bail out.

In 2004 President Bush, with bipartisan assistance, Lieberman and McCain to name two, attempted to reinstate traditional loan qualifying, which was blocked by Frank and Pelosi…along with Obama and the Black Caucus. It is part of the Congressional Record.

Rationalizing, theorizing and politicizing won’t change reality… this meltdown is a Liberal Democrat failure…not Republican, Independent or Moderate..….and no matter how much taxes are raised it won’t ever overcome their incompetence or greed…whichever you choose. "

" glenroy pimps the idea that nobody is at fault execpt the Democrats... balderdash... What a load of elephant dung!

Phil Gramm is the author of the bill that eventually caused the meltdown. But glenroy would have us believe that the author of a bill bears no responsibility for the collapse that grew out of it.

Yes, there are some corporatist Dems and I support bouncing them out of their leadership positions.

However, we have to ask ourselves:

Which Party has said "Government is the PROBLEM" for some 30 YEARS starting with Ronald Reagan?

It was only a bit over a week ago that the Bush appointee to the Securities and Exchange Commission finally put an end to 'Self-Regulation'.

The Republican Party owns the lion's share of the blame for this mess... and that's why the parrots are sqwaking so loud.

~Ruff "

" NB- There is a big difference from the solution to the S&L flameout and the current Bush-Paulsen Bailout plan.

The government merged some failed S&L with other financial institutions that found enough assets to make the acquisition (with government help) wise. Then the RTC took over the failed S&Ls and sold off their assets over time.

This time the government is doing some merging but is only going to buy the toxic assets from the banks leaving them able to engage in the same reprehensible grifting that created the mess in the first place.

I also notice that SO FAR, nobody is talking about restoring the FDR era lawus requiring the separation between investment banks, and commercial banks.

Ex-Republican Senator (now Banking Lobbyist) Phil Gramm's law doing away with that wise level of regulation is the root of all the turmoil in the commerical banking industry.

If commercial banks were not allowed to market what are humorously called 'securities' we could laugh as Wall Street shafted themselves because the investment shysters would not be in the 'same boat' as the American financial system.

Paulsen knows this and that is why the only bailout plans being discussed mainly benefit the Wall Street Weasels.

~Ruff "

" it was always considered a crime to offer no money down , interest only loans for homes until a few years ago. it's called predatory lending for a reason. the predators are now given a trillion dollars when 200 billion would have been plenty enough to pay off all the loans on real houses and give all those flippers free houses. of course nobody wants that. it would be a waste of money. but 5 times that much for worthless derivatives seems fine for many of the elite of the country. when 99% of us write congress and say no to the bailout and it still goes forward it makes one think our democracy is at an end.
both candidates and both parties supported this bailout of wall street. the credit bubble is bigger than ever now and will pop with a bigger bang.don't believe the hype. ask your local banker you trust if they invested in these shaky things like credit swaps and they will tell you that's for riskier institutions. they don't have a liquidity problem and are happy to loan to employers with legitimate businesses or people who actually have jobs and a good sized down payment for a home or car. i asked my favorite 2 car dealers if they had cash problems and they both said that was only the dealers offering no money down and no payments for x-months.
calls for a world wide government to fix our problems are naive at best and playing into the hands of the new world order folks at worst. "