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Liberal Rage (tm)
Luna's Political Journal
Stickers & The Bailout 
30th-Sep-2008 07:41 am
Hey, I got about 15 people who wanted stickers, and I only had 8 to give away (I thought I'd had 6, but apparently I had more than I thought!) so I went ahead and mailed out stickers to the first 8 people who commented. Now, my friend said he had a fuckton of leftover stickers, so I'm gonna ask him if he can spare 7 more so all the people who commented can get one. Hopefully he will have enough.

But yeah, those first 8 people should be getting their stickers in a couple days. I mailed them in a card so hopefully they won't get bent or anything.

I've been following the current financial crisis pretty close, watching news reports and reading newspaper articles about it every day for the past week or so, as well as voraciously reading everything people on my flist have posted about it, but I still don't totally understand how this bailout is supposed to work.

As you all know, yesterday the House rejected the bailout and the stock market went down 777 points, which meant nothing to me until Brian Williams explained it had lost 7% of its value. Even I understand that's bad.

FWIW, I don't like this bailout one little bit, and I'm glad it didn't pass the House, but I do know SOMETHING'S got to be done, or we're gonna go into another great depression. Now I work at a grocery store and people always need food, so my job is pretty safe, but it's still gonna suck. My grandfather was born in 1928, and I grew up hearing his stories of how terrible it was to grow up during the Great Depression.

WaPo: The leaders of the country said: Trust us. The people said: Not this time. That pretty much sums it all up for me. I mean, my whole thing is, it was the unfettered free market that got us into this problem in the first place, and NOW the CEO's and the republicans want government intervention? All that's gonna happen is we'll bail them out this time, and then they'll continue spouting their "free market solves everything" philosophy, and we'll be in another financial crisis as soon as we turn around. Why can't the allmighty free market fix this problem on its own?

Oh right, that whole great-depression-the-sequel scenario. SIGH.

Also, hey, OT, but what's going on with these gas shortages around the country? It seems mostly like a Georgia thing, from my flist.
30th-Sep-2008 01:12 pm (UTC)
If I believed in god I'd say he's pissed, what with the three sevens. Or maybe I'm just trying to mock the whole thing rather than worry that the country is sinking like the titanic.

No gas shortages here; in fact, prices have dropped seventy cents in the last two months. It's $3.25-3.29 a gallon here.
30th-Sep-2008 01:35 pm (UTC)
I'm worried that the (second) article you linked points out that the Congresspeople listened to the angry concerns of their constituents rather than their party leaders because it's close to an election. Shouldn't they be listening to their constituents ALL the time?

Also, I think the stock market is just a game of psychology. Until someone tells me otherwise, I'm thinking the drop is like the investors' version of running to the bank to pull out their money. And what's the connection between the House rejecting the bill and the stocks dropping anyway? I can't think of an objective one.

It's all so confusing.
30th-Sep-2008 05:16 pm (UTC)
Well, the stock market fell because investors had been holding their breath hoping for a bailout because otherwise there's going to be more bank failures, and it will also affect the industrial sectors pretty badly too (if people can't get car loans, people won't buy new cars, that sort of thing). Banks are even scared to lend to strong businesses right now, which means that business activity is declining, which means that people are getting laid off, which will drive the unemployment rate up... it really is a downward spiral :(.

So, yes, to a certain extent, it is the equivalent of running to the bank to pull out their money, but their money was invested in the American economy, so it hurts basically everyone :(. I'm scared for my parents - they're not rich and their retirement accounts probably just went to hell.
1st-Oct-2008 03:16 am (UTC)
Still -- investors. Psychological. Not a measure of how many banks failed in a day, or something like that.

I know, the only people I feel are really not going to do well here are those retiring in a few years and watching their retirement accounts fall like crazy. Everything else I'm optimistic will pick back up in uh... 10 years at most.

Okay, maybe that's not optimism. But at least it's not forever.
30th-Sep-2008 02:08 pm (UTC)
I think the impression of how bad the Depression was to grow up during varies based upon what someone's socio-economic level and place of residence was to begin with. Those living in the major urban areas had a very different impression than those on farms. Therefore, it would be a much greater impact on more people now, I think, because a larger percentage of the population lives in urban areas now.

Regarding the gas shortages: apparently there is a special formulation of gas that is sold in the Atlanta area and when Ike came through, it disrupted the production of that gasoline, leading to shortages. There are also shortages in other places in the South, such as North Carolina, because Ike caused problems with the (either major or only) pipeline feeding the area.

Edited at 2008-09-30 02:08 pm (UTC)
30th-Sep-2008 05:25 pm (UTC)
The bailout thing is so frustrating... I'm of the opinion that we need to do something, although I hope the bill's failure means that the Democrats try to get a party-line vote that includes protections for workers and homeowners, rather than the GOP's insurance sham - that "insurance" plan would basically involve an outlay of federal money with no chance of recouping our investment.

But above all, we need to do something - the more stocks fall, the more companies collapse, the higher unemployment goes, and the worse the spiral gets. We have to find a bottom somewhere, and the longer this goes on, the more elusive the bottom of the spiral becomes.

It's easy to say that you want these companies to take a bath for what happened, but the problem is that each company that fails employs many tens of thousands of people, people who will probably not be able to find new work because everyone is scared to hire right now.

The answer here is re-regulation - but we can't go back and regulate retroactively :(. I'm sure once Obama gets into office we'll see serious moves to re-regulate the financial markets, which will hopefully bring long-term stability, but in the meanwhile we have to deal with the facts on the ground that right now the market is falling with no floor in sight.

One thing to keep in mind is that the bailout's goal wasn't to buy these things at a high cost - it was to buy these securities at a deep discount so that everyone knows what kind of loss will be taken - it's no longer a nebulous figure, investors and consumers will know with certainty that, say, Bank of America took a loss of 60% on the bad assets, but the bad assets are now off the books and it's safe to invest again. With people investing again, banks will start lending again (though without doing those crazy ARM and sub-prime loans), and then unemployment will start to drop as businesses can hire again.

So I find myself hoping that the Democrats organize a better bill, but doing nothing is absolutely frightening. We really are looking over the edge of a cliff at another Great Depression.
1st-Oct-2008 01:35 am (UTC)
It really hit home when they said that the 700 billion could pay for everyone's health care for 6 years. As someone who is swamped in backdue turned over to credit medical bills, it makes me angry.

So, from what I am understanding, the government will be using the 700 billion in taxpayer money to buy out all the 'bad' or 'toxic' loans that are killing this billion dollar companies.

So, since we are paying for them, why doesn't that make every home loan automatically have a 'paid' stamp put on it?
4th-Oct-2008 12:56 am (UTC)
Or hey, how 'bout money to feed the hungry. $700 billion could buy a lot of pasta and peanut butter.

Unfortunately, hungry people don't give millions to politicians. Can't imagine why.
4th-Oct-2008 02:45 am (UTC)
Yeah, wouldn't that be nice?

I am just...Arg. The news keeps talking about the 'average' American being invested in the stock market, or owning a home...What about those that don't? I rent. Doubt I'll ever own a home. And the stock market? Do normal, everyday people really buy stock all the time? I highly doubt it.

Of course us lower middle class (or poverty level) folk don't matter much to them there big guys up in Washington, cause we're all dumb and don't got them internets they talk about.
4th-Oct-2008 01:49 pm (UTC)
This shit pisses me off. Didn't the deregulation start with Reagen? I think it's a basic human right to have decent housing,food and medical care(including mental health). But in America, you have to pull yourself up by your bootstraps even if you don't have boots. :(
4th-Oct-2008 08:03 pm (UTC)
Normal people don't buy stock all the time, but they might have a 401k, which gets invested in the stock market. So it does hurt those people if the stock market falls, but that's in the long term. In the short term, no. And they don't really give a damn about even those people, but they can pretend they do. Lower middle class? Is that where your second home is a time-share? *glares at McCain who thinks the cutoff for "rich" is $5 million/year*

And you know, I think it was only this year that I read about the difference between a pension and a 401k? A 401k has a defined pay-in, but a pension has a defined benefit. For the past few decades, companies have been pushing towards 401ks, where there's no guarantee you'll have enough to live on in retirement, cuz it's better for them. Not better for you, though. It's been such a cultural change that I didn't even think about it.
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