US Government's $700 billion bank bail out.

[Swedes]

It's so wrong. The vast majority of the money will bail-out people who really don't need government support. I think they should fund their welfare system (to the tune of $700 billion if necessary) so that there is a safety net for people at the bottom who really do need government assistance. The shareholders and the like should be allowed to lose their shirts as I'm sure they have a spare in the wardrobe. I'm not sure it matters that the odd bank will bubble under.

Am I the only free marketeer?

I disagree with the taxpayer funding a bailout, cestlavie.

And books won't tell you much.

How long have you lived there?

Whereabouts, too?

I was brought up by conservatives in Houston, TX. Left there for the liberal bastion of Austin, TX in 1989.

Moved to Denver in 1993, with a stint in Boulder for a few years. Finished up in liberal/gay community of Denver - Cap Hill - before moving to Edinburgh 7 years ago.

Was working poor and middle earner. Even had a bankrupcy due to divorce, back to back lay offs in dot.bomb, and being struck by a drunk motorist when I myself didn't have health insurance.

Was homeowner and renter.

Stats are going to help you crack the mindset of people over there, FWIW.

Random people, including the working poor.

I do know they're not happy, and they don't care so much about getting credit as they do seeing more and more of their money leaving their wallets when all their bills are going up.

Cloudhopper: look, I'm not saying this is a good thing, that this a net gain or anything like that. As I said previously, the choice is between a short and incredibly damaging collapse or a long and painful period of readjustment. Regarding the bail-out, the taxpayer ends up paying either way - do you honestly not see that? Whether its X billion upfront or whether its X billion in falling taxes, increased Medicare, lower high street sales as a result of not doing the bail-out. There is no easy answer here. The tax payer will be hurt whichever way it plays out. Just because you can put a fixed sum on it doesn't make it worse than the alternative.

Sorry, meant 'stats are not going to help you crack the mindset . . . '

Living here as long as I have, I have seen in many ways how the apple didn't fall far from the tree, but in others, there are some differences which are very hard for Brits and particularly English to get their heads round.

cestlavie, explain what makes you think what this bailout is going to do. If I could understand the premises that lead to your argument, I might follow it to the same conclusion.

Notice how little the government have said about why this is going to help. It is just empty rhetoric.

Do you think banks are seriously going to start lending again in the same quantity and at the same cost as before? So that we can all go back to our lives again and go on as normal?

Notice how quickly this has turned around from blaming the markets for wrongly pricing risk to blaming the 'taxpayer' for being too 'stingy' to keep money in the pockets of the rich?

Expat: personally, I disagree on the use of books. I've lived in England for the vast majority of my life and still wouldn't pretend to understand how people across the country think about things. Do I know what how a local lad in Hartlepool feels about life? Do I know how a single mum in Surrey thinks about things? Do I know how an investment banker in Kensington views life? Subjective is not the same as objective.

Thing is, I think the taxpayer is going to pick up the tab either way. The damage has already been done.

Expat, I was half joking about the Grapes of Wrath of course, but there is an argument that the recession following the 1929 crash turned into the great depression because of unwillingness to make this sort of large scale intervention.

I think the whole problem has been caused by the excesses of the poorly regulated free market and the ideological belief in the market's self-healing powers. I don't think clinging to the illusion that there is a free market solution to this catastrophe is going to be much use at this point.

Huh, cest? I don't think books bring you the mindset for an entire nation was the point I was making.

For example, people in the NorthEast of the US for the most part think very differently from people in the South in many, many ways.

That much can't be captured in books.

So yes, I've read Nickled and Dimed and watched Michael Moore but I have to say if I were not American myself I would take away a very different impression of life there from a foreigner who had never lived in the US for any length of time reading or viewing the same thing.

and btw, where are you living now, cest?

where in the US? how are you liking it?

i found the West suited me more than Texas, exceptions of course (such as Colorado Springs ).

again, the worldview of people like Earlybird will be different, her having been an expat here than a repat back to the US.

Actually expat I didn't like the West that much on the whole, although I did enjoy my time in San Diego

I lived with a bloke from San Diego for a couple of years.

He always had good pot .

Wonders if allie will be around to read that slight on Colorado Springs . You gotta wonder about a place that has three exits for 'Focus on the Family' off I-25.

If the poor are more dependent on credit than the rich, and if the state wants to help them, then the state should instigate a means-tested credit transfer scheme for existing debt. Whereby the interest rate is state-subsidised.

The fundamental problem here is that because debt has been vastly underpriced, the poor have been lent money they cannot repay by unscrupulous lenders.

Now we are arguing that because the poor can't sustain those debts, and because the falsely valued assets behind those debts aren't enough to cover their losses, their lenders need to be bailed out. The poor can't even sustain their debts, let alone pay them back?

Too much cheap money chased too few assets.

Asset prices are overvalued.

Now even sustaining the cheap flow of credit can't sustain them. Even the bailout probably won't be enough in a world where the fragility of the whole pyramid scheme has been exposed.

So again explain to me how the taxpayer (i.e. from the future income streams of working people) buying the toxic assets from the balance sheets of private companies is the sensible thing to do to look after the poor?

Cloudhopper: just to say again, what this bailout will do is allow a period of readjustment. No, of course the banks won't be lending in the same quantities or on the same terms as previously, that's for sure. But they won't be turning the tap off overnight which will have a far more damaging impact on the individual, and particularly the poor. And also just to say again, the taxpayer will be paying both for a bail-out and the absence of a bail-out. They're on the hook either way.

There seems to be some misapprehension that this is designed to make the tax-payer pay for the banks' mistakes whilst letting the banks off. It's just not that simple. There is no way in the short term to make the banks 'pay' which won't hurt ordinary people more - unless you've got any ideas.

I'd also say, by the way, that the concept of 'unscrupulous lenders' taking advantage of the poor innocent consumer is somewhat overblown, certainly in the UK. People on the whole have not been borrowing to put food on the table and clothes on their kids' backs. They've been borrowing for holidays, consumer goods and going out. Look at the ONS data on trends in consumer expenditure or Credit Action for what people are getting into debt over.

Banks may well have made excessive amounts of money available on cheap terms, however, we, the consumer, have been also all too willing to lap it up.

I agree with cestlavie. What the government is trying to do is get the banks lending again. It worked in Sweden and whilst I don't agree with the Paulson plan (making him the money god and the banks giving up nothing), I think something needs to be done - the Dodd stuff looked reasonable re equity and oversight. I'm not sure what the Senate hammered out (that the House Republicans then rejected) but know it was bipartisan. There must be a copy of it somewhere.. hmm. Here's what happened next, if anyone's interested. I think McCain and Obama should stay out of it, personally.

Anyway, am posting to find out how you're all keeping up with this. I'm reading Paul Krugman's blog and staying with CNBC for news. Gave up on the NYT coverage of this (except for Krugman, natch) after they seemed to adopt a "let's just make shit up" policy last week.

Wow, what a rousing and moving speech, Dubya. 'Vote for this, Congress. It'll help. Bye.'

the other issue, of course, is that this is an election year and the election is coming fast.

a lot of congressional seats are up for election.

approve the bailout and it could be seen by voters as a 'yes' in favour of increasing taxes during a recession (already official in the US) to shore up big biz and let's face it, it's not going to go over well for the most part.

just a reminder to all you expats on this thread to register to VOTE pronto:

rockthevote

Agree expat - I read somewhere (I forget where) a quote from a Congressman (forget who it was and which party he was in - remember it was a guy, though!) which said that if the weekend comes with no plan, it's done for as congressmen would go home and catch up with their constituents who are overwhelmingly against it. He said that his emails were running 300 to 2 against a bailout.

Apols for not remembering the details; the 300 to 2 caught my eye.

Got my official ballot this morning, wahey!

just talked to my mother.

sentiment in texas is vehemently against, particularly in their area, which was hard hit by Ike.

people are already struggling and feel this is just propping up the Northeast.

also that it's not going to work, things are too far gone and the confidence is gone and things should be left to run their course.

it'll be interesting to see what happens.

i got my ballot last week .

i've always voted absentee, even when i lived in CO - just nice to sit and vote with a big glass of red and a full tummy.

The tentative deal that was agreed yesterday was scuppered by Repbulicans who moved the goalposts and wanted to re-open negotiations. Great idea perhaps, but there is no time to start over. Unfortunately, an imperfect plan is better than no plan at this point.

The Democrats are the majority, so if necessary, can 'ram through' a plan without the Republicans buying into it. They have been working today to form some sort of government concensus which doesn't appear to be materialising.

Heard an interesting theory just now: Republicans will not publicly vote in favour of the plan because they will surely be voted out of office by angry constituents. Everyone knows a rescue deal has to be done, so Republicans 'save face' (and arses!) by not endorsing the plan - and will let the Democrats force the issue. That way, the crisis is averted and the Republicans can 'blame the deal' on Democrats which allows them (the Republicans) to avoid responsibility and probably allows them to be re-elected when the times comes.

really strong opposition and a lot of seats up for re-election shortly.

'they go under, they go under. that's capitalism.'

yeah, i can see that going on, EB.

The proposed deal fell apart yesterday around the time McCain and Obama arrived in Washington.

Some are speculating that McCain is hoping to appear Presidential by presenting an alternative proposal that the Republicans feel they can support. He'll look good and so will they - and perhaps it will give him a boost in the polls at a crucial time?