The United States Economy

[DoctorAperture]

what about the 600billion thats gona be used to bail us out?

[BNW]

what about the 600billion thats gona be used to bail us out?

Problem here is that no one ever thought that this problem was going to get this bad. We sort of have to bail them out, or our economy will go down the tubes, and we might see a horrible recession, or even depression.

If allocated correctly, that 600 billion could be very effective, but knowing our government, that won't be the case I suspect.

[kamikaze3000]

The recession is already happening, and it's going to be big. There's no time to reverse it right now; we just have to wait for the economy to sort itself out. Again, at least it won't be as bad as the 30s.

[runningninja]

what about the 600billion thats gona be used to bail us out?

Then the government will get even more debt. It will catch up to us, mark my words.

[lord_day]

The recession is already happening, and it's going to be big. There's no time to reverse it right now; we just have to wait for the economy to sort itself out. Again, at least it won't be as bad as the 30s.

Thats not true. A recession is defined as two successive quarters of negative growth, and that hasn't happened. All that has happened is that the growth rate has slowed down.

[blue_tetris]

Negative growth is a ways away.

[Turtle]

This is just a phase. As long as the government doesn't make us pay our money to the companies that screwed themselves over, I think this will be passed soon enough without any permanent damage done to anyone.

[Radium]

I feel this isn't a cycle. 700,000,000,000 bail?

[blue_tetris]

I wish I had securities or insurance with AIG. Then it wouldn't feel so bad having to pay them. Why couldn't we bail out Dominos Pizza or Coca-Cola or some product or service that I actually care to use? If I have to give my money to a private organization, I'd love for it to be one that I consume.

[scythe]

I wish I had securities or insurance with AIG. Then it wouldn't feel so bad having to pay them. Why couldn't we bail out Dominos Pizza or Coca-Cola or some product or service that I actually care to use? If I have to give my money to a private organization, I'd love for it to be one that I consume.

Same. I do, however, think we should bail out Wachovia. I think we need to subsidize Coca-Cola as well as put more public funding into the Georgia Institute of Technology.
On principle, I don't think we should bail out AIG, no matter how much it will hurt the economy. I'm worried a little more about the global implications of not bailing out AIG in that it could hurt global investor confidence in the US, potentially harming our participation in the global economy.
Did I make sense there? Economics is not my native tongue.
Fun little note on the $700 billion, by the way: they just wanted to choose a really large number.

[Topo]

The whole point of government is to move money around, mostly from people to services, but also from people to particular groups. The government may use the people's money to save a major private insurer, in turn preventing a possible major collapse of the industry, just as it it is obligated to prevent a pending military or natural disaster. At least that's my opinion.

[blue_tetris]

The whole point of government is to move money around, mostly from people to services, but also from people to particular groups.

The point of the government is to move my money to particular groups? I don't like the sound of that at all. I like using my money for me. In fact, a pretty big part of my liberty is to move my money around to particular groups. But I get to choose which groups get it. Why is the government better equipped to decide what to do with my money than I am?

[Topo]

you are also receiving a good portion of your "investment," if you will, back, in the form of essential services. besides, assuming you pay taxes, a large portion of your income is simply taken by the city or town, state, and country. If you live in New York City, and I recognize this does not represent the country as a whole, upwards of 40% of your income may be taxed away. Simply put, the government isn't necessarily better at investing your money, but it can sometimes make the necessary investments, in the necessary quantities, that everyone separately would never do.

[lord_day]

Well it seems some of you got your wish. The bail-out didn't happen. Here are some of the immediate side affects that have already happened:

•Markets plunge after U.S. bailout failure
• Shares dumped after U.S. bailout rejection
• Asian markets tumble, Europe mixed
• Russian trade briefly suspended
• Ireland backs bank deposits as stocks fall
• Belgium bails out faltering bank Dexia
Taken from CNN.com

Already US stocks have fallen by $1.2 trillion, which is more than the original bail-out was going to cost. I remember some people's argument against the bail-out was that the banks would be reckless if they thought they could be bailed out by the government. However, right now confidence is so low, that many of these banks are going to go bankrupt...

[blue_tetris]

I found this line to be pretty revealing:

"It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number."

The Treasury didn't do any finance. They picked an arbitrarily large number. One that "sounds good". It certainly makes you wonder if they have the economy in mind, or their image.

Also, you can't tell if the things that have occured are consequential to the rejection of a bail out. There's very little way of telling if those financial effects would have been prevented by a bail out. In fact, if a bail out did occur, I imagine some constituency would track down everything bad that happened "as a result" and another would track down everything good that happened "as a result".

Considering that the value of the bail out was pulled from a hat and not from a balance sheet, I can't imagine they'd have predicted the effects of the bail out accurately.

Already US stocks have fallen by $1.2 trillion, which is more than the original bail-out was going to cost.

And if the $700 billion bail out went through, the stocks wouldn't have fallen at all! That's a $500 billion surplus. I proved it... using math.

Mincing figures and claiming everything is the fault of a single source is a pretty low tactic in "proving" a decision wrong. I'd think you'd distrust any source that led you to those conclusions. I shudder to think you may have reached them alone.

[lord_day]

You can render any argument void at this point by saying we don't know what would have happened if AIG had been bailed out. There is no way to know. My point from posting all those figures, was that the fact that no bail-out occurred lead to immediate, negative effects.

Sure everything that happened plus more could have still happened after the bailout, but I think it's unlikely. The economy had been running on the assumption that the bailout would occur, and was doing better than it currently is now. Also, now that Bush has promised that the bailout will occur, it seems that the economy and stock market are picking themselves up again.

[blue_tetris]

You can render any argument void at this point by saying we don't know what would have happened if AIG had been bailed out. There is no way to know. My point from posting all those figures, was that the fact that no bail-out occurred lead to immediate, negative effects.

You can't render any argument void. Only arguments which take the current series of events and blame them on a single existing condition.

Again, the rejection of the bail-out preceded several negative effects. Correlation don't imply none of that there causation. Most negative effects in the market are caused by perception. I bet if we said we bailed out AIG and actually didn't, you'd have seen the opposite. The immediate response would have been one of blind optimism because the government once again stepped in to save the day.

Real financial effects would take at least a month to solidify, as well. Any bail-out money would fill up current accounts and turnover wouldn't be visible for up to a year. Futures and securities could have been enough to create spending after maybe a few weeks. The rest is psychological; a placebo bail-out would work just as well for those things.

[handofgod]

Our economy has gone through low points in the past. This is a phase we will eventually grow out of.

OF course...there is that issue about the said trillion dollars that the US is now in debt for. But I think we know who's to blame for that.

[Qix]

The Senate just passed a revised version of the bailout, now its up to see if the house is able to pass it as well. Personally, I think they are trying to rush this when they need to step back and calm down. I think the bailout could work if done properly, but the speed at which this is trying to be passed endangers its effectiveness severely.

[Mr__X]

The revised version of the bill is basically a name change, and over 400 pages of earmarks/"pork". This is really saying that this bill isn't the best thing to do, it's just getting shoved through Congress quickly.

[Zora_S_Kenneth]

Read the subject of the post and that pretty much will sum up my thoughts.

Although in this case, time is of the essence with a colossal idiot like George Bush screwing up our economy at every turn. Maybe we needed to rush it a little bit. Just not as much as now.

[blackson]

So it seems this bail out will eventually get passed. I think it's a "last call" for bush before he goes out. This most likely will only raise the morale for the American people, which is good, but not at the cost of 600 million people. When people are happy, things go well. When happy people have no money, things don't.

[Zora_S_Kenneth]

I love you for not capitalizing "bush". Thank you. :love: :love: :love: :love: :love:

I don't think morale is affecting the economy that much, however low it is. Money doesn't always == happiness and happiness CERTAINLY =/= money. Bush leaving the white house, however, should boost morale enough to bump the economy up a tad, but no more than a tad. The 700 billion however, we have no idea what it'll do. Save a bleeding wound, yes, cure a heart condition, probably not. We'll need more than that.

[blackson]

In an attempt to woo recalcitrant House Republicans to vote for the $700 billion economic bailout bill, senators loaded it up with earmarks, including $2 million in tax breaks for companies that make wooden arrows for children and millions for U.S. wool producers and auto racetrack owners.

Reference

This is serious bullshit. These were just a few of the preposterous earmarks added to convince the House into siding with the bill.

Deeply ashamed in American politics right now.

Discuss.

[jean-luc]

I've been against the bailout all along. And now I get to declare "Told you so!" even if I can't establish causality. Because I want to.
The bailout happened, and the economy still SUCKS.
http://finance.google.com/finance?q=IND ... DEXSP:.INX