Charlie Rose

Gary M  10/05/2008 12:31 PM Report

Gary M writes: The causes are a flawed pricing mechanism where-in individual components are accounted, but aggregate feedback loops are not. That cause is coupled to an incapacity to identify and eliminate troubled accounts. Unable to adjust to far from equilibrium conditions the entire system tends to chaotic behavior, and panic tends to ensue.

It is, more simplemindedly, the rollover effect of the short comings of schols black far from equilibrium, and regulatory abstinence.

These factors aside, throwing money at the problem does not solve the problem, though it may bind an unhealthy condition withn an unsanitary bandage.

Neil MacCallister  10/01/2008 09:35 PM Report

No, Linda, it is not "the consumer" who "drives the economy", the consumers mostly just spend the profits (..and that includes the rich!) If you used the $700 billion to give every American $2,000 (..that is the math) do you really think we would all use that money to buy health care? ..or improve our local grammar school? No, we would buy funny lights for our Halloween houses, ..and inflation would rise by that $2,000 per person.

Linda Gilleran  09/30/2008 02:32 PM Report

People are saying that $700B is an incomprehensible number. Well, let me make this simple. There are currently ~6B people on this earth. Which means we could give ~$100B to each person on this earth with the proposed 'Bailout'.

If we REALLY WANT CHANGE, why don't we give $1 million to each person residing in the US, $2 million to each small business, and $3 million to each small business focused on clean tech in the country, and use the rest to give each resident of this country complete health insurance, fix our education system, fix our infrastructure, fix social security, and save the rest?

Wall St. is a $$ black hole.

THE CONSUMER IS WHAT DRIVES OUR GLOBAL ECONOMY!

THINK.

TABS  09/29/2008 12:48 AM Report

Back in the old days their was a Republican Senator from Wisconsin named "Tail Gunner Joe" who used to rant and rave that, the piece of paper he held in his hand contained the names of 150 Communists in the State Department or was it 201 Communists?

all the suit that you wear  09/27/2008 12:40 PM Report

this guy is hilarious, but even greater to listen to. thanks charlie rose et al.

Preston  09/26/2008 06:06 PM Report

$700 billion is the WORST case scenario. And if CREDIT gets crunched too much for too long putting an END to construction and then everything else, the biggest diversion bitchers in town will be wishing for "money problems".

Neil MacCallister  09/26/2008 02:50 PM Report

Why is it you socialist ‘peaceniks’ always end up stamping your feet, swearing, throwing stones at others, and calling for blood? Is that the totality of your contribution? When will your “greed” for line-space, and ‘venality’ of discourse evolve? Talk about “some old wrinkly guy”, ..you people are touting a candidate from 1917!!! On the other hand, we could look at some of the ‘new cards on the table’: Have you noticed that the $700billion is almost exactly what has been spent so far on the Iraq war? Could it be that the Congress, and some of their Democrat allies on Wall St. are looking for “an equal share” of some imagined pie? So a few companies threaten bankruptcy just before the election (..enter Obama from stage left). The President is told $700billion will satisfy, and that the Congress must have control over the spending (..this is called “regulation”.) It is “High Noon” on America Street, ..”Who Shot Liberty Valence”, ..who will be the “Survivor”?

sock puppet  09/26/2008 11:50 AM Report

The great laissez faire market oriented capitalists (when it works in their favor) are already setting up a bogus system of buyouts in excess of the market price, which will automatically and systematically screw the taxpayer YET AGAIN. Any gain achieved by the buying low and selling high should go to those involuntary (socialized) capitalists - the taxpayer - not to the greedy bastards that got us here in the first place. The inevitable Halliburton, Black Water style VENALITY AND CORRUPTION attendant with the disdain for government contracts (as demonstrated by Cheney himself) and our treasury will reduce us even further into a banana republic status.

sock puppet  09/26/2008 11:32 AM Report

Sec Paulson said, "I share the outrage that people have," ... "It's embarrassing to look at this. I think it's embarrassing to the United States of America. There is a lot of blame to go around." Fine, now lets (peremptorily) throw him in jail. He is peremptorily setting up a system where he is the despotic king of all he surveys. Given our unbridled venality as proven by our permitted K-street lobbyists (who will get or control the lions share of the $700 billion), M-I complex, preemptive wars for oil hegemony, Halliburton and Black Water dishonoring our system that is singularly held in contempt by Cheney himself, the inherent CORRUPTION that will accompany this bailout will double the cost to $1.4 trillion. Inherent disrespect for gov't operations, contracts so imbued by this administration will carry the precedent into the administration of the bailout. Lord knows we've still got enough egregious greed to abuse a bottomless purse with no strings attached right into a doubling or more to $1.4 t. The inflationary affect of this bailout (money printing) alone could put it over the initial $700 b amount.

Preston  09/26/2008 10:30 AM Report

Good point Mr. TABS. Perhaps we should send them to China to help China with their "human rights" issues and improve their "intrinsic value" for growth of their middle-class. And also send members of the press, and these "economic professors", and Republican congressmen who are misrepresenting this effort, to stabilize the CREDIT MARKET to avoid a much costlier and irreversible Economic Depression, by calling it a "$700 billion BAILOUT", which it is NOT; which those in the press and others I mentioned, would understand if they would just do a little homework. As far as catching the crooks is concerned, that can be done later. As for NOW, we need to get the ball rolling. Or we can hang that Shelby character and his "guru economist" whoever the hell he is.

TABS  09/26/2008 03:21 AM Report

The Chinese executed a coupla guys over a few toys with lead in them, what would they do to a bunch of managers who put the country at dire and immediate financial risk?

Val  09/25/2008 11:45 PM Report

I was struck by Rep. Frank's comment that those who made this mess have already left with their money, implying that these nothing that the government can do about that and that we should only focus on the problem.

It is totally unacceptable that those who got us into this mess have walked away with huge compensation packages. And there's nothing that the government can do about it?? What happened to SOX?? What happened to corporate accountability?? The management and the board of directors of all of these financial firms should be indicted by the Justice Department for Corporate Malfeasance with extreme prejudice! Those individuals must be made to forfeit any and all compensations, bonuses, profits from options and severance packages. Then and only then, should you even consider any bailout efforts.

I am totally opposed to any bailout. The Senate was fooled by the President into believing that there was immediate danger from Iraq. Now, the President is telling you that there is immediate danger unless billions of dollars are authorized for a bailout. Do not rush into any action!!

Neil MacCallister  09/25/2008 11:11 PM Report

I wish we could speak more clearly: Let’s call it a $700 billion “purchase” instead of a “bailout”, and let’s see what we are buying. The news is still reporting that the main item is the “sub-prime” mortgage loan. It should not be hard to fairly price one and sell it with reasonable considerations to each side, even if the buyer is the public. The main pain for the housing consumer was being offered (only) high interest rate loans (starting at 11%) that were scheduled to “adjust” upwards (into the 14% and 18% ranges) despite the fact that we all saw national wages levels sit stagnant, or drop. But those were “forced sales”, right? Those families had children to house, yet these were the only loans commonly offered. The Real Estate Agents were pushing them: “Yes, I know this is a bad deal, ..but you should sign anyway, and then just apply for a transfer to a better (fixed) rate in 2 years.” Wealthier people received loans of 4% (fixed). Didn’t we KNOW those “working class” contracts were going to be unsatisfiable by those homeowners? (..Guaranteed-to-fail company-housing contracts were a central suffering in Upton Sinclair’s book, ‘The Jungle’) The investment companies made bets on those ‘future promised’ monies, but now it looks like those “bad deals” for the workers are now “bad deals’ for the investors. But I agree with speakers like Allen Meltzer, that this is being overblown when it is called “the end of the world”. If the investors want out of the headaches, fine, ..but they must give up the hoped-for upward-adjustments in monthly mortgage payments demanded upon the homeowner. (Maybe tie that upward adjustment to the percent rise of the average US wage?) If the public has to buy those mortgages from the investment houses, the value of that “account receivable” should be figured at the balance on the loan reset to a 30 yr. fixed repayment schedule. That schedule will lower the monthly payments to a level where MANY of those distressed owners may be able to continue to make their payments and forestall foreclosures. If the loan does continue satisfactorily, the government will even find a modest and fair profit. And if that house is a recent purchase, and that recent sale price is now seen to have been an “overvalue”, ..well, we know how much that “overvaluing” averaged nationally, don’t we? (..35%, isn’t that about the average ‘slide’?) Well, ..let the government “reset” that mortgage total to the actual sales price minus the 35% slide. This is fair since that false value was an effect of the deceptive (usurious) “entry” loans (..”No interest for 1st year”) which spurred home purchases and drove home prices to artificially high values before the “upward adjustments” started kicking in nationwide, and the foreseeable failures brought the market down to where it is now. Is that too much to ask? If the mortgage company wants the public to buy that house mortgage, it must first accept the prior-minus-the-slide purchase price, and the expectation of the “pay-off” coming in at a fair rate of return (7% fixed over 30 years) The public/government buys that mortgaged property, informs the tenants of the new (lower) payment level, and the new (lower) balance due. The tenant/homeowner can now more easily survive the payments, and the foreclosures are much fewer and farther between. The government buys all these mortgages at significantly less than the $700 billion being considered (..that’s 5 million houses!!!) and may even stand a decent chance at getting a reasonable return on that “bailout”. If the brokerage house decides to keep the loan, fine! Or if you have a better plan, what is it?

Stephen Wise  09/25/2008 12:00 PM Report

As big as it is, the proposed bailout isn't enough to solve the financial crisis facing the U.S. Perhaps our leaders know that, and are just trying to buy time to get out of office and let it collapse on the next guy.

Any honest dealing with our problem will first acknowledge that we can no longer consider ourselves to be independent. We need the world to have mercy on us, so we better get humble fast, and beg the world for forgiveness for deceiving it with Iraq and with the SIVs.

chernevik  09/25/2008 10:23 AM Report

I'm interested in Chairman Frank's discussion of the shape and likelihood of the Paulson proposal, and his arguments for the Democrats' proposed changes.

I'm less interested in his repeated attribution of the problem to "deregulation" and asides about the innocence of Fannie and Freddie. These have gone beyond pertinence to the problem to become groundwork for restoration of the GSEs and expansion of regulation.

There are strong arguments that affordable housing policy and the GSEs made huge contributions to this problem. If Chairman Frank is going to chew up bandwidth inoculating his agenda against those, the show should give his opponents a similar opportunity to make their case.

Gary M  09/25/2008 05:02 AM Report

in considering ricardo amaral's post, i want to ask What part the standard pricing mechanism for derivatives played in the debacles of finance that have occurred since the billionaires bailout?

In your response, i appreciate it if you considered the larger senses in which that pricing mechanism is not well bounded, but is random, and non-statistical, nonliner and strangely attractive to chaotic behavior in the far from equilibrium states that do occur near the time of onset of these occasions. As you see i describe a pricing mechanism that is itself perhaps locally and necessarily bounded but not so sufficiently well bounded at some other undeclared scaling. These boundary conditions are the realm of the julia geometries now so well understood to mark the interface of order and partial but knowable disorder.

It is my suggestion to you a more regular international market of real and imaginary components can be achieved by a general solution of the boundaries of the black scholes pricing mechanism, a process which i would call interfade 'transparency.'

In other words, until the black scholes mechanism is tamed according to the geometry of the M-set solution to the Julia Sets, modern financial progress will continue as haphazard as at present, nevermind the artificialities human greed intoduces. But what might this transparency look like. Well, i do not know, but i suggest a model already exists in analogy from electrical circuitry.

Specifically, i would appreciate you consider Mandelbrot's early work at IBM in the early 1950s which involved current flow thorough contiguous circuitry.

One detail of that work involved ferreting out an electrical surge problem which was causing the early computers to short out. The result of his investigation acknowledged that the electrical current varied according to the known properties of electricity, but that there were non-linear feedback loops aperiodically producing current surges in the system which the engineer were not able to design about using the standard solutions, hence the very expensive breakdowns. As there was no predicting when these surges might occur, a linear model engineering model was limited in utility. The designed system was not properly bounded. However, armed with the idea of how surges operated, IBM's engineers were able to design redundancies in their system to detect and bypass surges as they were likely to occur, and IBM computer design advanced.

If one were to consider black sholes the standard design model, and take the value of the underlying asset as its current, one might similarly bound black scholes to behave within the courses of chaotic behavior at far from equilibrium circumstances.

Thank you.

a reader from Public Broadcast Systems who knows the fine mind chit chats to share and to discover.

TABS  09/25/2008 03:49 AM Report

The ball is now in the court of the US Congress. If the Congress does not act the people who today want to lynch the Smart Guys on Wall Street will be coming for you next. With a Congressional approval rating in the single digits and a President in the low two digits this government can not afford not to take action and not right the situation. This is not about which party has the upper hand but WILL BE about the survival of the Republic let alone the economy. The people of the US will want their homes, SUVs and big screen TVs and will sign off on anyone who can restore those things to them. For it is in times of dire duress that Democracies fall. So it is better to be spit at today than to be lynched tomorrow.--------------------------------------Two years ago anyone who suggested that the US would be facing an economic collapse would have been thought crazy. Yet today it is becoming a self evident truth. Today it may seem crazy to suggest that the US government will fail, but the question is does one want to take the risk of it happening?---------------------------------------------------------------How does one express the anger and disgust one feels about the "Smart Guys" on Wall Street that led the world financial system to the edge of the abyss? So to quote a term heard on CNBC, the "Greedy Little Monkeys" on Wall Street deserve to earn the equivalent of moron pay.-------------------------------------------But the imperative is to sign off on the dam thing to avert another Great Depression. The Great Depression which Bernanke well knows was largely caused and exacerbated by the lack of government action.

Ricardo C. Amaral  09/25/2008 02:06 AM Report

I posted the following on the Elite Trader website on their economic forum, but they moved my posting from the economics forum to the forum where they post jokes. I guess from the point view of Wall Street this subject it is just a bad joke and nothing else. Here is a copy of my posting: My screen name in that forum is SouthAmerica.

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The Largest Swindle in Global Economic History - September 24, 2008 SouthAmerica: It is underway in the United States the largest Swindle in global economic history.

The United States economy is becoming a case study for the largest economic swindle in world history.

It is laughable to watch a Republican administration that dismantled many of the regulations that helped create this massive mess in the US financial markets and refused to regulate a derivatives market that went from $ 900 billion dollars to $ 62 trillion dollars a market completely unregulated and that has been flying on automatic-pilot under their watch – a Republican administration that changed the rules on Federal Insured Pension Plans to supply more casino chips to the high rollers in Wall Street to gamble also with the pension money – it is fun to watch the Republican Party setting up the Democratic Party to be the politicians that are going to be blamed for the passage of the Mother Of All Bailouts in World History.

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The Democrats are too stupid to realize that they are being set up to be the fall guy in the future. The Democrats were in control of Congress when this historic Pathetic bailout was passed on a Hurry, a real Hurry – the sky is falling type of environment - and no time to study what was really going on behind the scenes….

These scoundrels did show their hand when they published the first draft of this $ 700 billion dollars bailout as shown in a front page article published by The New York Times yesterday the article said: “The passage is stunning. “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 administrative agency,” the original draft of the proposal bill says.

These scoundrels want to assign unlimited authority to a system that has fail badly and they don’t want any checks and balances attached to this bailout in the name of restoring confidence into the US financial system.

If Americans are so Dumb as to fall one more time to these scare tactics that the Bush administration has been using all along then Americans and the rest of the global financial system deserves to taken for another ride – only fools would fall for these empty scare tactics

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I understand that common sense has been gone out of the window of the US financial system a long time ago – but it is getting to the point that is becoming laughable and Pathetic how these guys think that a $ 700 billion dollar bailout is going to fix the system when in reality is just going to supply more casino chips for the scoundrels to destroy the entire system even further.

The scoundrels don’t want to unload only their bad bets on the real estate market into the lap of the US taxpayers – they are lobbying very hard to dump all kinds of toxic waste into the US government garbage dump – the Federal Reserve and US Treasury.

The scoundrels want to unload a massive amount of losses related to the derivatives market that no one has any idea of how many trillions we are talking about since this market it is unregulated and nobody has a clue how much losses are already in the pipeline related to these off balance sheet financial weapon of mass destruction.

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Americans are not smart enough to connect the dots and realize that by assuming these massive losses today in the trillions of US dollars indirectly they are helping to dismantle in the coming years all the unfunded social programs that we have here in the United States including Social Security, Medicare, Medicaid, the pension system of federal employees, and so on….

At the end of the day these massive bailouts are fixing nothing for most people in the US economy since real estate still will fall maybe by another 30 or 40 percent (when you take in consideration the exodus that is underway of illegal immigrants – which has been a major force in pushing real estate price values up year after year - and now their impact on real estate prices is working in reverse since they are not only not creating new demand for real estate and a place to live, but they are seller and they are leaving a vacuum behind that has never happened in US history).

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During the year of 2007 it is estimated that 1.2 million illegal immigrants went back to their countries reducing the number of illegal immigrants living in the US from 12.5 million people to about 11.3 million people. During the year of 2008 the exodus has continued and with the deteriorating economic situation in the United States and a real war against illegal immigrants you can bet that this trend will continue for years to come and as a result having a negative on the price a demand for real estate around the United States.

The unemployment rate in the United States is already a lot higher that the official statistics show – but if Wall Street want to continue placing their bets based on fictitious information they also should pay the price for their stupidity and should eat the losses from bad investments.

It is obvious that the US GDP and all the buying that has been done on credit in the US economy was based on fictional financial system and a large part of the US GDP is based on Fiction and it will disappear in the future.

The US government already spent $ 29 billion on Bear Stearns, $ 200 billion on Fannie and Freddie, $ 89 billion on AIG, they extended insurance to money market funds that could cost taxpayers billions and billions of dollars (there is no price tag on that one) and now they are asking for a blank check to be pissed away to the tune of $ 700 billion dollars.

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Let put in some perspective here for people to see the size of this fiasco: If you add all the pieces related to these bailouts we already have $ 1 trillion dollars and with further economic deterioration in the US economy in the near future this number can grow to $ 2 trillion dollars overnight – the price tag to keep the foreign adventures going in Iraq and Afghanistan will cost at least another $ 2 trillion dollars. Just to clean the Us economy of these problems it will cost at least $ 4 trillion dollars to be financed by the Chinese and the Japanese.

Compare that mess $ 4 trillion dollars in toxic waste with a country such as Brazil with a very clean balance sheet, its energy needs independent of imported foreign oil, a country with vast amount of natural resources, and a GDP around $ 2 trillion dollars

Basically today Brazil’s GDP (a golden nugget) is only half of the value of the toxic waste buried inside the US economic system.

Right now they should just provide some emergency money to keep the US economic system afloat until February 2009 when the new Congress takes over and has time to come up with a reasonable bailout plan and at the same time pass the new regulations to control the financial system in the same package.

Only idiots would pass the black check right now to the tune of $ 700 billion dollars and would expect that the 44,000 lobbyists that infest and corrupts the political system in Washington D.C. would let any regulation to pass in the future other than some silly meaningless regulation that would be a waste of time.

Americans are so dumb that they might pass this bailout without understanding what the scoundrels sold to them – that would be another signal to the world that the US financial system it is just a very risk casino with very dumb people in charge.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=138152&perpage=6&pagenumber=1

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Brian  09/25/2008 01:27 AM Report

What a joke. Frank is a sleaze ball, much worse than the executives he so freely puts down. Ask yourself why these banks took high risk loans in the first place, and you'll find your answer is not to fulfill some "get rich quick" scheme, but because they were forced to by law (Community Reinvestment Act). Leave it to the federal government to force companies to do things that they were going to do anyways, but less efficiently and safely.

Matt  09/25/2008 12:18 AM Report

thank you mathwhiz, Sharon, et. al. I've received that idiotic "Birk" email 4 times today and I'm getting sick of telling people that their math is off by a factor of 1000...

Omar the Butcher  09/25/2008 12:02 AM Report

Anton, the math works out to $425/person, not $425,000. You would do well to spend part of your $425 on a calculator

Guy with a calculator  09/24/2008 10:33 PM Report

Hi Anton. You should make sure the guy you quote can do simple math before posting. $85 billion divided among 200 million people is $425 each.

Anton Grambihler  09/24/2008 10:31 PM Report

Barney needs to support the Birk Plan.

I’m against the $85,000,000,000.00 bailout of AIG.

Instead, I’m in favor of giving $85,000,000,000 to America in a

We Deserve It Dividend.

To make the math simple, let’s assume there are 200,000,000 bonafide U.S. Citizens 18+.

Our population is about 301,000,000 +/- counting every man, woman and child. So 200,000,000 might be a fair stab at adults 18 and up.

So divide 200 million adults 18+ into $85 billon that equals $425,000.00.

My plan is to give $425,000 to every person 18+ as a

We Deserve It Dividend.

Of course, it would NOT be tax free. So let’s assume a tax rate of 30%. Every individual 18+ has to pay $127,500.00 in taxes. That sends $25,500,000,000 right back to Uncle Sam, but it means that every adult 18+ has $297,500.00 in their pocket.

A husband and wife has $595,000.00.

What would you do with $297,500.00 to $595,000.00 in your family?

Pay off your mortgage – housing crisis solved.

Repay college loans – what a great boost to new grads.

Put away money for college – it’ll be there.

Save in a bank – create money to loan to entrepreneurs.

Buy a new car – create jobs.

Invest in the market – capital drives growth.

Pay for your parent’s medical insurance – health care improves.

Enable Deadbeat Dads to come clean – or else.

Remember this is for every adult U S Citizen 18+ including the folks who lost their jobs at Lehmann Brothers and every other company that is cutting back. And of course, for those serving in our Armed Forces.

If we’re going to re-distribute wealth let’s really do it...instead of trickling out a puny $1000.00 ( “vote buy” ) economic incentive that is being proposed by one of our candidates for President.

If we’re going to do an $85 billion bailout, let’s bail out every adult U S Citizen 18+!

As for AIG – liquidate it. Sell off its parts. Let American General go back to being American General. Sell off the real estate. Let the private sector bargain hunters cut it up and clean it up.

Here’s my rationale. We deserve it and AIG doesn’t.

How do you spell Economic Boom?

I trust my fellow adult Americans to know how to use the $85 Billion

We Deserve It Dividend

more than I do the geniuses at AIG or in Washington DC.

And remember, The Birk plan only really costs $59.5 Billion because $25.5 Billion is returned instantly in taxes to Uncle Sam.

Kindest personal regards, Birk

T. J. Birkenmeier, A Creative Guy & Citizen of the Republic

PS: Feel free to pass this along to your pals as it’s a very sobering thought on how to best use $85 Billion!!

sock puppet  09/24/2008 07:29 PM Report

Mr Paulson said, "I share the outrage that people have," ... "It's embarrassing to look at this. I think it's embarrassing to the United States of America. There is a lot of blame to go around." Fine, now lets (preemptively) throw him in jail. He is premeditarily setting up a system where he is the despotic king of all he surveys. Given our unbridled venality as proven by our permitted K-street lobbyists (who will get or control the lions share of the $700 billion), M-I complex, preemptive wars for oil hegemony, Halliburton and Black Water dishonoring our system that is singularly held in contempt by Cheney himself, the inherent CORRUPTION that will accompany this bailout will double the cost to $1.4 trillion. Inherent disrespect for gov't operations, contracts so imbued by this administration will carry the precedent into the administration of the bailout. Lord knows we've got enough surfeit of egregious greed (still) to abuse a bottomless purse with no strings attached right into a doubling or more(?). The inflationary affect of this bailout (money printing) alone could put it over the initial amount.

Paul  09/24/2008 07:14 PM Report

Look to Sweden 1992 for some alternatives.

MotherLodeBeth  09/24/2008 05:35 PM Report

How can a CEO be rewarded for taking a company down the drain???? Its pure greed. And I dont know how the Republicans or Democrats can not take the blame for not seeing leaks in the dam before a major break occured. These men/women work for us and they have NOT done the job!!! And all the promises in the world dont mean a fig fart to me. Its ACTIONS I want to see!!! .......... Does anyone REALLY think anything much will change after the election????....... And doesnt GWB have an MBA from college? ROFLLLLLLLLLL A lot of good thats done this country!!!!

Neil MacCallister  09/24/2008 04:49 PM Report

I think Gen. David Petraeus might be responsible for this whole 'financial crisis'.

At the start of this year's election cycle, everyone in America was profoundly focused on an Iraq 'quagmire', humiliation, war-loss, and impending betrayal of battle-torn Iraqis. Gen. Petraeus got the administration, the counter-productive Congress, and all those Pentagon careerists, to listen to reason, and send in enough personnel to get the job done (..as McCain had long advised, and Obama opposed). David Petraeus was right, and now, we no longer have Iraqi destructions glaring at us from the front pages every day!

Congress needed to think quickly if they were going to devise another 'crisis' to blame upon George Bush, or John McCain, ..so phone calls were made! They were determined to get their socially-destructive, congressional-enhancing, candidate into the White House. But they needed a gimmick!!

'I know!' they said, 'Let's say we are all going to the poor house unless we buy Barack Obama!' (..and let's get a lot of money out of it for ourselves, too!)

I wonder: What kind of 'mortgage deal' did Sen. Obama get on HIS house?

eile  09/24/2008 03:28 PM Report

Charlie Rose should do a show on executive compensation, invite CEOs, board of directors, "CEO compensation experts" to discuss executive compensation history, scheme and how the pay align companies' interest/performance as related to current financial crisis.

If Paulson is correct that exec pay limits will discourage participation in the $700 billion rescue program, what does that say about the interest/priority of those CEOs vs their companies and the country? Is economic stability so critical that we must be slaves to the selfish CEOs?

No bailout without exec pay limits. And no bailout without oversight. We are in financial turmoil today because we let bankers lend $300K+ to borrowers without proper documentation. Imagine what $700 billion will do to the country if we continue this stupid practice.

uncisu  09/24/2008 09:41 AM Report

Jane, re: "WE need more policitians who will face the crisis without all the political ramblings." His first line was that this is all the fault of conservative philosophy! Sounds like political wrangling to me. He complained that the market (or people) got us into this mess and that the government should fix it. Barney, let the market purge it's bad assets and the market (the people) will fix itself. I made a responsible decision to buy a home I could afford, yet now that the government is stepping in I will be stuck with paying for the millions of people who made poor decisions. Take away the risk, and people will continue to make poor decisions for generations.

RE Mant  09/24/2008 09:10 AM Report

Monetarism of the sort in this plan is the economic ideological counterpart to the democratic evangelism that led us into the Iraq war. In it you will find the same sort of narcissism, optimism, and no-fault permissivism that you find among liberal evangelicals. Anyone who doesn't believe is a tyrant or an ogre. You find it among both neo-cons and politically correct. I do not see much difference between George Bush, Condoleeza Rice and "Helicopter Ben" Bernanke, as he is known for his reference to monetarist founder Milton Friedman's comment, that, if necessary, he would drop money from one. They may think they are great compassionate humanitarians, but these ppl take advantage of honest folk, and ignore reality. There is no difference in my view among sending the National Guard to the Middle East, corrupt politicians with their earmarks and parasitic speculators feeding on easy money and bail-outs. And btw, like Friedman, Alan Greenspan, Paul Wolfowitz, and Richard Perle, Bernanke is a Jew. In any case, monetarism is the unlikely admixture of Keynesian belief in "demand" manipulation through easy money, and a libertarian bias against govt spending. It says it believes in gentle, continual monetary expansion to secure prosperity and that only govt deficits upset this apple cart, but bail-outs are seen as the only means to prevent recessions and depressions, in which ppl are impolite enough to want to hang on to their money. However, the point about recessions or depressions is that they are a necessary punishment for the permissivism that brought them on. What matters to monetarists is to sustain the status quo and prevent prices from dropping, through the application of "insurance" in the form of still easier, even free, money. In this they are in league with traditional Keynesians who see the answer in more consumption rather than more supply. If, as they say now, "the credit mkts are not functioning," it is because they don't have the money to lend, but printing some is not going to help this, and only spread the debt and perhaps depreciate everyone's money faster. Monetarism is also completely blind to money created by private credit and its potential abuse. To put it in blunt terms it is the essence of the notion, frequently remarked these days, that business likes to privatize gain, but socialize debt. Thus Paulson today: "This is not about the management of the cos, just liquidity." But why advocate monetary expansion at all? The answer to that and the desire for bail-outs seems to be that they view the monetary system as a large balloon based on credit expansion. If credit is lost anywhere, it can deflate or, in another metaphor, meltdown, the whole thing. Absent in this is any idea of actual productivity or value. The notion that this is a pyramid-scheme is clearly not some crank's, but their own, and that is why they are so desperate. The whole idea has been packaged and sold like a "confidence game" for several decades now. They may as well be speculators, themselves, and, indeed, some of them are. Bray Hammond, a former Fed official, 50 yrs ago showed in his classic history of banking and money that this sort of gaming has been an ever present force in America since the beginning. Real Whigs, including John Adams, hated banks and paper money: "I have never had but one opinion concerning banking, from the institution of the first, in Philadelphia, by Mr. Robert Morris and Mr. Gouverneur Morris, and that opinion has uniformly been that the banks have done more injury to the religion, morality, tranquility, prosperity, and even the wealth of the nation, than they can have done or ever will do good. They are like party spirit, the delusion of the many for the interest of the few. I have always thought that Sir Isaac Newton and Mr. Locke, a hundred years ago, at least, had scientifically and demonstratively settled all questions of this kind." This is all precisely analogous to the arguments over whether it is better to have a balance of power or a League of Nations, nuclear parity or a ban on them, and over gun control. Like violence in politics, commodities or money in economics serves to keep us honest, and will whether we like it or not. Like Adams, I do not think things have changed any in the 300 yrs since John Locke examined the issue. He was right about government and he was right about interest rates and monetary debasement. A far better idea if one wants to aid these cos, is as Allan Meltzer suggested earlier tonite, to simply offer them a loan, and if they won't take a loan, then they don't deserve to be bailed-out. Frank, btw, is making a Marxist argument regarding regulation, and this seems to be behind his position on this.

Jane  09/24/2008 08:37 AM Report

I am not a supporter of Barney Frank or a constituent. His explanation of the current financial crisis was the best I have heard. It was on the level that common people understand and placed the blame on those responsible. So called "Financial Wizards" on Wall St with their dipsy doodles, etc. Thank you to Charlie Rose for allowing Congressman Frank to appear on your show. WE need more policitians who will face the crisis without all the political ramblings. BTW I am not a O-team supporter.

Douglass Montrose-Graem  09/24/2008 01:33 AM Report

Did you not perceive the surreal here? One of the god-fathers of chaos

turning into an apostle for a solution? Wonders never cease.

Sharon  09/24/2008 12:05 AM Report

85 billion divided by 200 million is only $425.

Chris Baker  09/23/2008 11:16 PM Report

If the federal government feels the necessity to finance, invest in or operate a bank to provide more credit, they should do so. However Barney Frank is proposing instead to bail out executives and shareholders who made bad decisions, which isn't the function of the federal government.

Ricardo C. Amaral  09/23/2008 10:55 PM Report

Today I posted the following on the Elite Trader forum: September 23, 2008 - In the old days we used to have economic cycles that included also deep recessions.

According to Ben Bernanke today the American taxpayer need to spend $ 700 billion dollars and probably a lot more to avoid a recession.

These clowns want scrap accounting rules to better fudge their financial numbers and pretend that they have earnings.

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I guess they expect that Congress should pass this new give away to Wall Street as fast as they can as Secretary of the Treasury Paulson has been requesting – they don't want give time for debate and try new solutions because people might wake up and realize this is a major scam like never seen before – after the dust settles we are going to find out that this bailout was the biggest Swindle in American history.

The American people should pay attention to all Senators and Congressmen who are running for reelection in November and if any of these people vote in favor of this major scam then they should vote these scoundrels out of office immediately.

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They should pass some small emergency bill right now with the understanding that the new Congress will debate and put the necessary safeguards and regulations starting in February of 2009 - in the meantime let some people who should not be in business go bankrupt and out of business. Let Wall Street and the banking system consolidate and weed out some of the bad apples.

If the stock market goes down another 30 or 40 percent that probably is the level that the market should be anyway based on the actual value of current assets and the prospects for the future of the US economy.

Let the big boys go up in flames for a change and teach them a lesson otherwise these scam artists will just do it all over again.

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In the last few weeks I came to the conclusion that Hank Paulson is just another self-serving insider and he is part of the problem.

Lets not forget Bill Gross a person that I thought was a smart man that I respected and I usually read his writings. Last night he was on the Lou Dobbs television show giving his opinion about what should be done right now regarding the $ 700 billion bailout - the only problem is that he has lost all the credibility that he once had before he was trying to make the case for Fannie and Freddie to be nationalized by the US government.

After the US government nationalized Fannie & Freddie the news came out that Bill Gross had made $ 1.9 billion dollars out of that fiasco.

Today Bill Gross's opinions became worthless since we know that he is a self-serving greedy man and nothing else. And right now he might be salivating about the prospects of making another killing to the tune of billions and billions of US dollars in the latest scam that Wall Street is setting up.

Source: http://www.elitetrader.com/vb/showthread.php?s=&threadid=137948&perpage=6&pagenumber=2

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*****

Associated Press - September 23, 2008

Federal Reserve Chairman Ben Bernanke bluntly warned Congress on Tuesday it risks a recession, with higher unemployment and increased home foreclosures, if lawmakers fail to pass the Bush administration's $700 billion plan to bail out the financial industry.

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danny  09/23/2008 10:44 PM Report

We in trouble...

math_whiz  09/23/2008 10:28 PM Report

Anton - check your math

$85 billion divided by 200 million = $425.00

busybevie  09/23/2008 09:27 PM Report

What are you thinking Charlie? Barney Frank is the very last person we need to be hearing from at this time.

Let's get some historical perspectives about this type of economy and "fixes" used by governments that have worked ... and WHY they worked.

Personally, I want REAL information not a commercial.

sock puppet  09/23/2008 08:45 PM Report

What happened to Bobby Rubin. Too busy kicking puppies, exploiting little old ladies, human frailty and evicting the Citigroup's own subprime victims? ------------------------------------------ Citigroup was instrumental in getting Glass-Streagall repealed.

sock puppet  09/23/2008 08:32 PM Report

$700,000,000,000. Another day older and DEEPER in debt. National debt limit increased to $11.3 tillion, or $11,300,000,000,000. Over 300 million population amounts to nearly $40,000 each. Our progeny can kiss their (collective) arse goodbye.

sock puppet  09/23/2008 08:18 PM Report

Anton - Not an economist so sure there's something wrong with your socialism. Maybe it would debase the currency, create inflation, reduce the labor market (why work? - initially untill inflation drastically erodes your $300k). Maybe that's why the wise-guys only apply your "Birk" principle to the top one per cent. Apart from that I say why not. Better than rewarding the predatory bastards running and ruining our system.

uncisu  09/23/2008 08:16 PM Report

Oh good, Barney Frank. It has been so long since we have heard from him Charlie. This ought to be an insightful, helpful and objective analysis of the crisis. I am sure we will all go away from this with a better view of the situation and will all feel a little better about ourselves as well. Nothing I want to hear more, just 6 weeks from the election, about this crisis than a 20 minute, unchallenged commercial.