Sarah Palin, Republican Vice Presidential Candidate

[Kuya]

Has it gotten to such an extent that Bush has to remind the US that democratic capitalism is a good thing?

You know, they haven't exactly told us, in some detail, why we need the bailout. They've limited themselves to chanting of death knells.

[aurik]

I already explained why the bailout is needed (and so have they, but the media doesn't exactly report it because it causes people's eyes to glaze over): there's a liquidity problem caused by the loss of faith in the banks.

If the banks don't have cash, they can't lend. If they can't lend, businesses start folding. Once that happens, people lose their jobs and go into money-conservation mode, which pulls the economy into a recession, causing more businesses to fail and more jobs to be lost. It's a self-reinforcing cycle.

[Olo401]

Has it gotten to such an extent that Bush has to remind the US that democratic capitalism is a good thing?

You know, they haven't exactly told us, in some detail, why we need their bailout. They've limited themselves to chanting of death knells.

Something does need to be done, but it's absolutely absurd to use the plan that Paulson authored without serious modification. Giving that much power over the markets to one person, particularly during THIS particular president's time in office, would be insane. Not because Bush is a fucking twit either - this plan, unaltered, would be the crown jewel in the doctrine of the unitary executive and would be a serious blow against the Constitution.

[eunhye]

Where is the cash that banks can't lend? In the packaged mortages/securites that they bought from other investors?

[zoobernut]

I already explained why the bailout is needed (and so have they, but the media doesn't exactly report it because it causes people's eyes to glaze over): there's a liquidity problem caused by the loss of faith in the banks.

If the banks don't have cash, they can't lend. If they can't lend, businesses start folding. Once that happens, people lose their jobs and go into money-conservation mode, which pulls the economy into a recession, causing more businesses to fail and more jobs to be lost. It's a self-reinforcing cycle.

But if we are already in this cycle, the money-conservation mode on the consumers part how is injecting money into banks going to stimulate people to start spending?

[sephir]

But if we are already in this cycle, the money-conservation mode on the consumers part how is injecting money into banks going to stimulate people to start spending?

It works like this: People deposit money into banks. From there the banks turn around and loan or invest that money somewhere else ie. mortgages or businesses. Banks must keep a certian reserve of their assets on hand (here its 10-15%, not sure in USA).

Essentially because people stopped making payments on these loans banks reposesed the houses. Usually this is not a big problem because there is a high demand for houses and it will be bought back fairly quickly. Unfortunately there is very little demand at this time, too many houses were built and sold based on this 'no money down' principle.

So now, Banks have a tonne of houses but almost no cash. Also with the prices of houses falling like they are, their initial investment has sunk by a huge margin. The houses they do sell are for a fraction of what they invested originally and they are just sitting on the ones they cant sell which has sucked up a load of cash.

As a result of this banks are worried/cant afford to make loans. Whether it be to other banks (for fear of the bank they loan it to goes bankrupt) or to people. What the government plans to do is buy up all of these bad mortgages from the banks giving the banks some on hand assets to resume lending.

What has made this mess such a disaster worldwide was that these bad mortgages were packaged up in investment deals and sold all over the world. Its not just in the US but an epidemic in the banks right now. A few places actually got off (such as the Canadian banks) due in part to their high reserve ratio (what assets they keep on hand, which saves them in problems such as this but prohibits growth), and by paying off the mortgages right away.

As far as why injecting money into banks increasing consumer spending, its sort of an indirect way. Because it will keep banks operational. Looking at the great depression when people made bank runs and ruined the banking sector as a result. What makes consumer spending turn around in a recession/depression is usually dependent on what caused such problem. In this case it will likely be when house prices start to bottom out or rise again because people will feeling safe knowing that the value of their biggest financial asset is going back up. In the US you can actually borrow against the value of your home so having these prices rise will mean people will be more willing to borrow against it.

[zoobernut]

It works like this: People deposit money into banks. From there the banks turn around and loan or invest that money somewhere else ie. mortgages or businesses. Banks must keep a certian reserve of their assets on hand (here its 10-15%, not sure in USA).

Essentially because people stopped making payments on these loans banks reposesed the houses. Usually this is not a big problem because there is a high demand for houses and it will be bought back fairly quickly. Unfortunately there is very little demand at this time, too many houses were built and sold based on this 'no money down' principle.

So now, Banks have a tonne of houses but almost no cash. Also with the prices of houses falling like they are, their initial investment has sunk by a huge margin. The houses they do sell are for a fraction of what they invested originally and they are just sitting on the ones they cant sell which has sucked up a load of cash.

As a result of this banks are worried/cant afford to make loans. Whether it be to other banks (for fear of the bank they loan it to goes bankrupt) or to people. What the government plans to do is buy up all of these bad mortgages from the banks giving the banks some on hand assets to resume lending.

What has made this mess such a disaster worldwide was that these bad mortgages were packaged up in investment deals and sold all over the world. Its not just in the US but an epidemic in the banks right now. A few places actually got off (such as the Canadian banks) due in part to their high reserve ratio (what assets they keep on hand, which saves them in problems such as this but prohibits growth), and by paying off the mortgages right away.

That pretty much sums it up.

Ok you restated everything that has already been said in this thread and I have already read. I understand what happened my question was specifically how do they expect this bailout to stimulate the economy on a consumer level?

[Maxxthepenguin]

Ok you restated everything that has already been said in this thread and I have already read. I understand what happened my question was specifically how do they expect this bailout to stimulate the economy on a consumer level?

Imagine consumers with banks around
Imagine consumers without banks around


There you go

[sephir]

Check my edit, it should be in there.

[zoobernut]

My point is that the economy is not one giant thing it has sections and sometimes those sections have issues independent of each other. It will take more than just bailing out the big financial institutions on wall street to get the regular consumer to feel confident in spending their disposable income again.

[archibaldcrane]

http://img.photobucket.com/albums/v2...hnmccain-1.jpg

[aurik]

I totally did not need that image of John McCain copulating.

[SDSD]

^^

eeeeew.

http://www.ultrabrown.com/posts/the-...in-train-wreck

Is the 'average American' really this stupid? Ivory tower of academia and all that, but I don't think I'm too far away from the norm.

[Correction]

http://i35.tinypic.com/2zf28ug.jpg

The logistics that we are already suggesting here, not having enough troops in the area right now. The… things like the terrain even in Afghanistan and that border between Pakistan and Afghanistan, where, you know, we believe that– Bin Laden is– is hiding out right now and… and is still such a leader of this terrorist movement. There… there are many more challenges there. So, again, I believe that… a surge in Afghanistan also will lead us to victory there as it has proven to have done in Iraq… And as our leaders are telling us in our military, we do need to ramp it up in Afghanistan, counting on our friends and allies to assist with us there because these terrorists who hate America, they hate what we stand for with the… the freedoms, the democracy, the… the women’s rights, the tolerance, they hate what it is that we represent and our allies, too, and our friends, what they represent.

[archibaldcrane]

God that part (about alaska being close to russia) is even worse than Couric asking how McCain has been a regulator in the financial markets.

How can she stick to the "alaska is close to russia and that's important" thing? It's...just unbelievable - even the lowest common denominator has to look at that and chuckle....

...right?

edit: ^^ brilliant, she's going to start talking about getting maps for "the afghanistan" very soon.

[Kwijiboe]

Oh man that still makes me laugh.

[archibaldcrane]

See, but while that was fucking terrible...

...this is pretty bad too:

Biden, commenting this week on the Wall Street crisis, said we should learn from FDR. "When the stock market crashed (triggering the great depression), Franklin D. Roosevelt got on the television and didn't just talk about the, you know, the princes of greed."

Just sit on that for a second and realize how ridiculous this is.

Spoiler: show

FDR wasn't president when the 1929 stock market crash hit (his term started in 1933), and televisions weren't invented at that time

[aurik]

yea hehe I lol'd at that comment.

[quannum]

The "russia is close to alaska" in the interview is ... just wow. i mean i've heard them trot that out before but the moosehunter ... she's like that iraq information minister dude.

http://www.cbsnews.com/blogs/2008/09...y4478088.shtml

transcript:

Spoiler: show

Katie Couric: You've cited Alaska's proximity to Russia as part of your foreign policy experience. What did you mean by that?

Sarah Palin: That Alaska has a very narrow maritime border between a foreign country, Russia, and, on our other side, the land-boundry that we have with Canada. It's funny that a comment like that was kinda made to … I don't know, you know … reporters.

Couric: Mocked?

Palin: Mocked, yeah I guess that's the word, mocked.

Couric: Well, explain to me why that enhances your foreign-policy credentials.

Palin: Well, it certainly does, because our, our next-door neighbors are foreign countries, there in the state that I am the executive of. And there…

Couric: Have you ever been involved in any negotiations, for example, with the Russians?

Palin: We have trade missions back and forth, we do. It's very important when you consider even national-security issues with Russia. As Putin rears his head and comes into the air space of the United States of America, where do they go? It's Alaska. It's just right over the border. It is from Alaska that we send those out to make sure that an eye is being kept on this very powerful nation, Russia, because they are right next to, they are right next to our state.

WE'LL DO IT LIVE!

O'Reilly Erupts at Right-Wing Radio Liars and Barney Frank!

[Zosi]

LOL
It's not psychology, it's not pseudo-science. It's cognitive science. Physical changes occur

You wouldn't know a physical change if one hit you in the face. Just stop posting already, you're not impressing any of us with your mangled interpretation of cognitive behavioral theory.