Lords of Death Forums Lords of Death Forums LoD General Discussion Bailouts are an act of communism

Ron Paul has it right
If he keeps making sense maybe people will turn toward him in 2012.

Flea, even though we rarely dont agree on much, Ron Paul has it completely wrong in this case....email me and we will discuss.

I was wondering when someone was going to talk about this.
Who are the socialists now! Bitches. Its a short path to healthcare from here!
I am actually really surprised that the largest socialist move came from the right wing folks in power. I just wish I could shake the feeling thats it just another grab at the treasury before losing power.

correct your statement....
at least most of congress is trying to...
its bi-partisan, and i totally agree with them.
Paulson was just trying to act in a manner as fast as possible to help stop the hemmoraging

When it comes to laundering tax payers money, it is a bi-partisan effort. It wasn't the "right" that voted this in, it was a bi-partisan effort mainly Democrats, rubber stamped from a liberal president that happens to have an (R) next to his name.

Wednesday, September 24, 2008
Dear Friends,
Whenever a Great Bipartisan Consensus is announced, and a compliant media assures everyone that the wondrous actions of our wise leaders are being taken for our own good, you can know with absolute certainty that disaster is about to strike.
The events of the past week are no exception.
The bailout package that is about to be rammed down Congress' throat is not just economically foolish. It is downright sinister. It makes a mockery of our Constitution, which our leaders should never again bother pretending is still in effect. It promises the American people a never-ending nightmare of ever-greater debt liabilities they will have to shoulder. Two weeks ago, financial analyst Jim Rogers said the bailout of Fannie Mae and Freddie Mac made America more communist than China! "This is welfare for the rich," he said. "This is socialism for the rich. It's bailing out the financiers, the banks, the Wall Streeters."
That describes the current bailout package to a T. And we're being told it's unavoidable.
The claim that the market caused all this is so staggeringly foolish that only politicians and the media could pretend to believe it. But that has become the conventional wisdom, with the desired result that those responsible for the credit bubble and its predictable consequences - predictable, that is, to those who understand sound, Austrian economics - are being let off the hook. The Federal Reserve System is actually positioning itself as the savior, rather than the culprit, in this mess!
? The Treasury Secretary is authorized to purchase up to $700 billion in mortgage-related assets at any one time. That means $700 billion is only the very beginning of what will hit us.
? Financial institutions are "designated as financial agents of the Government." This is the New Deal to end all New Deals.
? Then there's this: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency." Translation: the Secretary can buy up whatever junk debt he wants to, burden the American people with it, and be subject to no one in the process.
There goes your country.
Even some so-called free-market economists are calling all this "sadly necessary." Sad, yes. Necessary? Don't make me laugh.
Our one-party system is complicit in yet another crime against the American people. The two major party candidates for president themselves initially indicated their strong support for bailouts of this kind - another example of the big choice we're supposedly presented with this November: yes or yes. Now, with a backlash brewing, they're not quite sure what their views are. A sad display, really.
Although the present bailout package is almost certainly not the end of the political atrocities we'll witness in connection with the crisis, time is short. Congress may vote as soon as tomorrow. With a Rasmussen poll finding support for the bailout at an anemic seven percent, some members of Congress are afraid to vote for it. Call them! Let them hear from you! Tell them you will never vote for anyone who supports this atrocity.
The issue boils down to this: do we care about freedom? Do we care about responsibility and accountability? Do we care that our government and media have been bought and paid for? Do we care that average Americans are about to be looted in order to subsidize the fattest of cats on Wall Street and in government? Do we care?
When the chips are down, will we stand up and fight, even if it means standing up against every stripe of fashionable opinion in politics and the media?
Times like these have a way of telling us what kind of a people we are, and what kind of country we shall be.
In liberty,
Ron Paul

This is the scariest part.

Overpay or not, the taxpayers should not be held responsible.
You could say corporatism and socialism are a stem of capitalism, but both are anti-capitalist because of the redistribution of the public treasury. I could say both are a product of conservative, right-wing governing. Capitalism that lost its way.
There are two ways to redistribute money from the masses. From the public treasury to the poor (which you are a proponent of) or to the rich, I am against both. Redistributive methods whether you transfer the wealth up or down are disturbing acts on the tax paying population.
The government has no right to discriminate its funds to people based on class whether the money is being transferred up or down.
Assuming you are against this bail out; why would you be against redistribution of wealth, because of which way it is going?

i totally agree with this...there does need to be oversight and a committee that the managers and Paulson need to report too...however, i can TOTALLY understand why Paulson does not want to be second guessed...

The bonds they are going to be purchasing will still be trading on a discount relative to where they are in the marketplace.
Do you have any idea on bonds are traded in the marketplace? This isnt a rip or slam on what you know, but here is some background.
Bonds are not traded on any major market or exchange (except for Treasuries). The way to trade bond and securities is done the old fashioned way, bid and ask auction pricing. On Bloomberg (the largest trading platform in the world) if you say wanted to buy a bond, you effectively put out a "post" saying how much you are willing to buy a bond for. The problem is there are MILLIONS upon MILLIONS of bonds in the world and not everyone wants the same bond at the same time. In addition, with all bid/ask systems if noone wants to buy a bond due to liquidity or risk factors you "hold back" bids and capital and just flat out not buy them regardless of quality or ratings.
There are computer models or "matricies" that can price securities based on quality, coupon, maturity, duration, credit enhancements, prepay facilities, etc. etc. that can give a general "idea" on how much a bond is worth. However, as we are all aware, that bond is only as good as the price you want to pay for it.
The problem in today's market isnt the fact all of these subprime bonds or mortgage bonds are bad, its just that NOONE wants to bear any risk of owning them. Mortgage bonds, subprime loans, and mortgage tranches are made up of THOUSANDS of indivdiual mortgages. You would have to know every mortgage, every house, the income of the people owning the mortgages, the quality of the house, neighborhood, etc etc. etc. to really understand if that bond is a "good" bond. Since noone has the manpower or skill to do that, they just flat out dont own the bond.
The resulting effect is the "throw the baby out with the bathwater" mentality. An investor is effectively saying "since the only bonds i know are the ones guaranteed by Freddie and Fannie, i am only going to own those, not any of the others"....there is essentially no market.
Now the difference in prices is as follows:
Hold-to-Maturity. You enter all of the bonds characteristics into the model, it will spit out a "price". You can then look up the bond on major rating agencies and who serviced the loan and make additional assumptions. That is the "price" of the bond. By doing this, these bonds will be priced at around 70-80 cents on the dollar. As such, the government will gain 20% upside and all the coupon payments til maturity.
"Fire Sale Prices" These are the prices other investors will actually pay in the marketplace. THIS IS A NUMBER THAT IS TOTALLY MANIPULATIVE. The same bond that is still cash good and paying of coupons will trade between 10 cents and 20 cents on the dollar in a fire sale situation.
The solution to this is exactly what Sweden did. You pay the HTM price, take on the downside risk, but you take a pound of flesh in doing the deal in the form of warrants, options or ownership in the company that is asking for the bailout.
I hate all of the politicians...they dont know their asshole from a hole in the ground. I am a HUGE Paulson fan. He knows what he is doing and what needs to be done. He has already tapped the best and brightest in the fixed income world to help him manage through this problem. He positioned Goldman Sachs in such a way before taking his post that they are for the most part totally immune to this problem. He is a pure killer too when it comes to dealing with people and problems.