$700 billion dollars is just the beginning

OH Pappy stop with the bs.

-noeline

Pappy,
I'm not new to economics, but I cannot get a clear answer to this question, and I'm wondering if, given your background, you can shed some light on it for me. We are using the bailout plan to "level the market." What specifically happens if we don't?

-ibvirginia

a war that adds a billion a month,the first ever not financed with taxes.=pappy

pappy how did we pay for the other wars?

-mr-hankey-the-d

 

this will all go away when Obama gets the keys

-mr-hankey-the-d

Frankly JD's answer is as good as any. How many times have you heard that 100 economists would offer 100 different answers to an economic question.

I think if we don't 'level the market' then the market would level itself. Mainly by doing what any  corporation is required to do according to generally accepted accounting procedures, namely write down their bad assets to market value.

Don't you find it strange that there are banks with sufficient funds to buy those that are ready to go down ? It seems to me that there is funding available for some institutions to buy out these poorly run outfits. They are doing something right !

I believe that the 'risk factor' is the culprit. The investment institutions and brokerage houses that felt they wanted to take the risk and deal in subprime mortgages believed the enormous profits  were worth the risk. But when you accept that premise you must be prepared for the consequences if you guessed wrong.

 

-pappy

My confidence in you just went up a notch or three, Pappy.  Thanks for a good post.

Me! Me! Let me answer!! [image]

If we do not "level the market" the market will level itself. End story.

-jdtippett

A very simple, but not complete answer.  In a "free market" system which is what we are supposed to have in the US.  The market will level on it's own.  Part of the current problem is the fact that Mr. Greenspan facilitated the housing bubble by keeping interest rates too low for too long in his attempt to prevent the US economy form going in to a recession.  He pretty much admitted to this in front of the Senate Finance Committee a few weeks ago.  The "free market" system was converted to a "semi-free market" system when the government provided it's first bail out.  As I stated, 700 billion is just the beginning.  We have started down a very slippery slope as evidenced by the current debate on the bail out plan for the auto manufacturing industry.