Here's a copy of yesterday's draft of the bill:
http://www.cspan.org/pdf/marketsbill_draft.pdf. You can just look at the TOC on page 2 to get a sense of what's included.
1) It is bad governance.
Perhaps at first but there's quite a bit of oversight in there now.
2) It is bad law at a bad time.
You're right and I'd like to see something in the legislation that allows the treasury to suspend lending money under this act when specific financial indicators improve. The right time for a bill like this was a year ago but you know what they say about hindsight. The thing that spurred this action was when the
Reserve Primary Fund fell below $1. Continued failures of financial institutions as a result of failing troubled assets will make it impossible for anyone to borrow money.
3) It rewards a dangerously corrupt system of speculation.I don't think that it's rewarding the people that got rich off of it. Risky, subprime mortgage backed securities were being bundled with triple A securities in such a way that the packaged assets got a very high credit score. These are the people who got rich by gaming the rating system. They were selling bad assets to unknowing companies who thought that they were getting a very safe investment. The Bail Out intends to buy or insure these troubled assets with the hope that most of them will eventually pay off -- either the mortgages will survive or the foreclosed properties will resell. Failure to regulate the risky behavior of the Asset brokers and revise the rating system to catch it was our failure as a nation however, champions of the free market continue to insist (even now) that all regulation is bad. Those people have made their money though and they weren't actually doing anything illegal -- they were taking advantage of poor regulation and buyer's ignorance. I dare say most businesses are guilty of that on some level.
You're right that the mortgages were the root cause. When you hear that 65% of the people who got sub-prime mortgages could have afforded standard mortgages, you know that some funny business was going on. Greed was rampant from the real estate agent right on up to the buyers themselves. Everyone was speculating on a market that they thought could never sour. And we're paying the price for it -- I wasn't unhappy when My home gained $20k in value after 1 year of owning it. I'm also happy that I have a fixed standard mortgage.
4) It does nothing to help the average mortgage holder
It does now (section 124)
5) It is bad politics.
I agree in principle but we shouldn't give credit to W for this. Bernanke and Paulson issued the original plan, I think Bush has been lame ducking it for the last year -- he'll agree to anything now, he just wants it to be over. Bottom line is that we shouldn't stall the legislation and turn it into a political game (like certain Presidential Candidates who I will not name).
6) I think it is a trap
You're right, I think Obama has already said that his universal healthcare plan will be affected by this bailout. This is a costly plan with no guarantee that it will pay off but I believe not acting guarantees a break down of our economy that will take decades and a lot of unnecessary human suffering and hardship to work out.
7) It is borrowing money we don't have
What else is new? I see a giant chunk of spending here that almost covers the entire $700B. How does that compare with the rest of the world?
I appreciate your response T!
