That $700B Bailout
The New York Times has the story about how the government decided to present a plan to buy $700 billion of troubled mortgage assets.
I can’t see how this bailout makes anyone happy, except for the people being bailed out.
On the left, there is the sentiment that fat cats are being relieved of the responsibility for their poor decisions, at the expense of taxpayers. Lefties regret this because they could use that money for other socialistic programs they want to pursue, like taking over the health care system.
On the right, many economically libertarian folks like myself are also appalled that the free market isn’t being allowed to do its magic in punishing bad decisions — which means rewarding people who made good decisions, and thus maximizing efficiency in the system as a whole. And we’re depressed at a creeping socialism that no longer seems to be creeping.
One thing seems certain: it isn’t helping John McCain. He had better get himself a winning strategy on this issue, or he can kiss this election goodbye.
It makes me happy, and I’m not being bailed out.
The financial crisis was precipitating a flight of capital from money markets. If this had continued, the flow of money would have dried up, and without a free flow of money, the economic engine would seize up and grind to a halt. The results would be calamitous.
Paulson et al are doing what has to be done to prevent a major crash that could open the door to a new Great Depression. Kudos to them.
Besides, the government is not really in the hole for $700 billion. The mortgages they are taking over represent ownership of real properties. Those proprieties may not be worth as much as they were a few years ago, but they’re far from worthless. When some of those properties are repossessed, they will be sold to new (qualified) buyers, and the government will recoup some of its money. In other cases, the mortgage loans will be restructured to allow the existing owners to pay them off.
sauropod (b38788) — 9/20/2008 @ 4:03 pmIt isn’t helping McCain because it’s almost impossible for the ‘viewers’ to learn that it was McCain himself who tried to sponsor greater oversight, as he rightly claims in a recent speech.
His claims are being played off as election rhetoric.
This is an issue that should be helping him, and simultaneously crushing Obama, who voted against increased oversight.
There’s plenty of blame to go around for both parties, but this is an overall positive for McCain, as well as Palin, who has a record of transparency regarding government dealings with large oil companies. It is transparency and accountability that would have prevented this from happening.
If you have any doubts about the effect of a media that is an extension of a political party, this should settle them.
Apogee (366e8b) — 9/20/2008 @ 4:04 pm“One thing seems certain: it isn’t helping John McCain.”
No it isn’t. And that is one piece of justice out of the entire mess.
“He had better get himself a winning strategy on this issue, or he can kiss this election goodbye.”
Gonna be tough with statements like this.
‘Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.'”
And this on proposing handing our socail security over to the same crooks we’re bailing out.
McCain “Americans have got to understand that we are paying present-day retirees with the taxes paid by young workers in America today. And that’s a disgrace. It’s an absolute disgrace, and it’s got to be fixed.”
It was a hollow effort to try to pin any of the probelms on Obama and it obviously didn’t take hold.
Reason. It is GOP policies that led us here.
Bush, McCain, Gramm.
Heck. Of. A. Job.
jharp (f4bed7) — 9/20/2008 @ 4:06 pmI know a local gung ho obama supporter who is absolutely ecstatic hearing this news. This limousine liberal has millions in bank stocks that he grew through insider trading. What irks me is that the banking hotshots get to keep their profits in good times and really are not exposed to risk as their bad decisions and potentail losses are covered by the taxpayers.
Real estate here in Florida is in the toilet and the media has been beating the chicken little sky- is -falling drums for years about how real estate was a bubble and buyers should beware. They go beyond facts to hyperbole. And yes, they cry the blues about people being unaware of the possible downsides to ARMs.
madmax333 (0c6cfc) — 9/20/2008 @ 4:13 pmsauropod
“Besides, the government is not really in the hole for $700 billion.”
No one knows the extent. Taxpayers very well be on the hook for much much more.
“It makes me happy, and I’m not being bailed out.”
And I’m glad it makes you happy paying for the excesses of Wall Street out of your pocket.
Strange world we live in.
jharp (f4bed7) — 9/20/2008 @ 4:14 pmReason. It is GOP policies that led us here.
Keep dancing as fast as you can, jharp. Can you please link to a banking reform passed by Pelosi or Reid over the past 2 years? I can’t seem to find one.
Of course, you could always argue that they didn’t know it was coming, but that argument should disqualify them from continuing control of the Congress.
Apogee (366e8b) — 9/20/2008 @ 4:19 pmhttp://www.nytimes.com/2008/09/21/us/politics/21debate.html?hp=&pagewanted=all
Get Ready to Rumble.
Economics is now moved back to the third debate? I think McCain better be prepared for economic issues in the first anyway since it really is a national defense issue in scope.
Joe (dcebbd) — 9/20/2008 @ 4:20 pmFrom Wikipedia.
“The Gramm-Leach-Bliley Act, also known as the Gramm-Leach-Bliley Financial Services Modernization Act, Pub. L. No. 106-102, 113 Stat. 1338 (November 12, 1999), is an Act of the United States Congress which repealed part of the Glass-Steagall Act, opening up competition among banks, securities companies and insurance companies. The Glass-Steagall Act prohibited a bank from offering investment, commercial banking, and insurance services.”
jharp (f4bed7) — 9/20/2008 @ 4:24 pmThis WSJ article paints a pretty dire state of affairs that made it necessary. “Multi-year recession and similar to the Japan recession of the 90’s” are some descriptions used. Not happy about footing the bill for it but the alternative would have further penalized those who do borrow responsibly.
voiceofreason2 (3bfa7b) — 9/20/2008 @ 4:26 pmHere’s where more research is needed before people get their chains yanked by the MSM.
And in the following – I’m not talking down to people – if I do – I apologize in advance….
1. Banking is risky – all banking is risky
2. The Govt after the great depression that ended up killing 100 million people and ended in a nuclear fire – vowed – never again – fiscal security is MORE important than physical security
3. The govt is the FULL FAITH and CREDIT of the United States
4. No one is getting any direct cash – they are having their mortgages adjusted instead of foreclosed and sold to speculators
5. Anybody saying that people are getting free houses are lower than troofers, Chuck Schumer and need to rethink why they are soo angry that the government just saved their jobs and their savings
6. Thank God an adult not running for perpetual adulation was in the White House
7. NOT ONE DIME HAS OR PROBABLY WILL BE SPENT – just if 30 million people walk away from their life savings and decide to become homeless will this quadrillion trillion bazillion dollars be spent – and even then whoever is buying the house has to pay the government for it
8. This is the result of world competition and demand for oil and another result of way too much total taxation
Thanks for listening – didn’t mean to offend anyone
Also Lehman Brothers, Meriil Lynch and Bear Stearns have been in financial trouble since the Carter years – Lehman brothers had to save itself by merging with Shearson, then with EF Hutton (where are they now?) and then was spun off in the Clinton era by Amex as being too inept to function – the real surprise is they made it 15 more years
EricPWJohnson (c00a5d) — 9/20/2008 @ 4:28 pmjharp – Which of the authors of the Gramm -Leach-Bliley Act spoke at a 2008 presidential convention, and which convention was it?
ROA (bea1d3) — 9/20/2008 @ 4:30 pmGramm-Leach-Bliley allowed skyscrapers to be built on an unstable foundation. If the foundation had been sound, the skyscrapers would still be standing.
The unsound foundation was the loosening of mortgage requirements. 0% down, interest only, monster balloon payments that no one could make, liar loans, all meant that the true value of the paper was way less than the face value. How much less? Nobody knows, so nobody will buy the paper at any price. With the Fed taking this over, there is the possibility of an orderly restart to this market. It’s the best of a bad situation.
MartyH (268543) — 9/20/2008 @ 4:42 pmBTW-
Clinton signed Gramm-Leach-Bliley.
How come a Repuplican led Congress gets blamed when there’s a Democratic President, and the Republican President gets blamed when there is a Democratic led Congress? Seems like a double standard to me…
MartyH (268543) — 9/20/2008 @ 4:44 pm“And I’m glad it makes you happy paying for the excesses of Wall Street out of your pocket.” – jharp
It makes me happy that we are likely to avoid a catastrophic economic meltdown.
See Eric PW Johnson’s post (#10) for a good summary of the reasons why the government is not really going to pay $700 billion.
sauropod (b38788) — 9/20/2008 @ 4:45 pmMarket discipline hasn’t been working for thirty years. Failure is continually rewarded with pay raises, golden parachutes, and rich wives. Just take a look at something very small and very local: MSNBC. An anchor, Keith Olberman, is dead last in the ratings yet gets paid $2mln per year and made “head of news,” Chris Matthews is similarly ratings challenged and gets raise after raise, the executives at the dead last enterprise hang on and get raises every year–all this for achieving last place. This is “Crony Capitalism for Dummies.” Now check out the car business. They have refused to address the markets since the Japanese hit full force with economy cars that didn’t break down after three years. Unchallenged leaders in the auto market like Cadillac, Chevrolet, and Ford kept churning out the same tired cars while their executives were rewarded for losing market share each and every year. Look at any business in the U.S. and ask yourselves if market discipline is working in any of them. Our problem is not capitalism. It is the complete absence of capitalism.
howard432 (cc8b85) — 9/20/2008 @ 4:46 pmActually, GLB was passed to allow banks to diversify so that they could weather financial crises. And it looks like it worked: the diversified banks are the only type of finance corp that hasn’t seen a shutdown.
jpe (bd88bc) — 9/20/2008 @ 4:47 pmjharp – Bad idea trying the Gramm-Leach-Bliley act.
(November 12, 1999) Signed by Clinton.
“you can’t blame the mess on either political party — at least not if you want to remain honest.”
But it was never about honesty, now, was it?
Apogee (366e8b) — 9/20/2008 @ 4:55 pmOur problem is not capitalism. It is the complete absence of capitalism.
Well said, Howard.
What does a Democrat burn witches with? More witches!
Apogee (366e8b) — 9/20/2008 @ 4:59 pmjharp – Bad idea trying the Gramm-Leach-Bliley act.
(November 12, 1999) Signed by Clinton.
Comment by Apogee.
No, not a bad idea. It’s the truth.
And news flash, buddy.
Clinton isn’t running for President.
And Gramm is McCain’s economic advisor.
jharp (f4bed7) — 9/20/2008 @ 5:27 pmAnd Leach spoke at the Democratic convention for Obama.
ROA (bea1d3) — 9/20/2008 @ 5:38 pmjharp, your comments are getting dumber by the day as you repeat the same long discredited nonsense.
SPQR (26be8b) — 9/20/2008 @ 5:41 pmNo, not a bad idea. It’s the truth.
Only in your head. Follow the link. Even WaPo thinks that the GLBA produced exactly the opposite result than that which you claim.
And no, Clinton’s not running for President. Funny, either is Bush, but you don’t seem to realize that fact, which is why I pointed it out.
Apogee (366e8b) — 9/20/2008 @ 5:43 pmThe interesting lesson in this bailout is how Congress has completely abdicated any responsibility, any leadership, any role at all in solutions.
Congress has been doing nothing useful, not even much in the way of creative obstruction.
Congress as an institution has been a complete joke. Silly season 365 days a year. A Clown show. Buffoon central. It was not much better before the Democrats took over both Houses, but it is much worse now.
SPQR (26be8b) — 9/20/2008 @ 5:43 pmJPE-
I tried to amend my comments, but they got stuck in the swam filter.
The root cause of this financial crisis is bad home mortagages. If home buyers and mortgage lenders had reasonable restrictions this meltdown would never have happened.
MartyH (268543) — 9/20/2008 @ 5:47 pmI agree SPQR, and think that comment #15 aptly points out that much of the problem is with accountability. Government regulations that enforce ‘rules’ without the corresponding accountability for both the businesses and the leadership serve to protect the behavior that the market would correct on its own.
Apogee (366e8b) — 9/20/2008 @ 5:50 pm“And no, Clinton’s not running for President. Funny, either is Bush, but you don’t seem to realize that fact, which is why I pointed it out.”
I’m aware.
But the GOP candidate has voted with President Bush 90% of time.
And his campaign slogan. “Change”
Shockingly unbelievable! And the GOPers are buying it.
jharp (f4bed7) — 9/20/2008 @ 5:54 pmjharp forgets that Gramm left the McCain campaign back in July after complaining of a “nation of whiners” (must have read some of jharp’s comments).
He conveniently overlooks Jim Leach’s prominant position in the Obama-Biden campaign.
He also tries to bury that Biden voted for G-L-B, as did 89 other Senator’s including DimBulb Harry Reid – and that McCain did not vote as he was out of town.
And, just why did Bill Clinton sign into law such a defective piece of legislation?
But, if ignoring the obvious was a criminal offense, jharp would be doing 25-Life!
Another Drew (0d32b9) — 9/20/2008 @ 5:55 pmjharp, what’s shockingly almost unbelievable is that you are still repeating long-ago completely discredited talking points.
SPQR (26be8b) — 9/20/2008 @ 5:57 pmGramm never stole $100 from Fannie May.
And refresh my memory… how did Biden vote on that bill? I forget…
Scott Jacobs (d3a6ec) — 9/20/2008 @ 5:58 pmUh, Scott…
You forgot the “M” in $100M!
And, as we all know, Biden voted for Gramm-Leach-Bliley!
Another Drew (0d32b9) — 9/20/2008 @ 6:07 pmthe free market isn’t being allowed to do its magic in punishing bad decisions
There is no Free Market Fairy.
Steve J. (832d68) — 9/20/2008 @ 6:08 pmIBD schools jharp.
SPQR (26be8b) — 9/20/2008 @ 6:08 pmThe root cause of this financial crisis is bad home mortagages.
No, the root cause of the crisis is Wall Street “financial engineers” making it appear that junk investments were in fact triple-A.
Steve J. (832d68) — 9/20/2008 @ 6:13 pmIBD can’t school anyone except in cliches about the Free Market Fairy.
Steve J. (832d68) — 9/20/2008 @ 6:14 pmSteve, sounds like they have much to teach you too.
SPQR (26be8b) — 9/20/2008 @ 6:15 pmSPQR –
IBD knows about as much economics as Sean Hannity does.
Steve J. (832d68) — 9/20/2008 @ 6:19 pmThe root cause of this financial crisis is bad home mortagages.
No, the root cause of the crisis is Wall Street “financial engineers” making it appear that junk investments were in fact triple-A.
Comment by Steve J. — 9/20/2008 @ 6:13 pm
Very simply well put.
And the “financial engineers” walked away with billions. And the taxpayers get the bill.
jharp (f4bed7) — 9/20/2008 @ 6:23 pmSteve, no, I’m afraid not.
Tyler Cowan does some more schooling of Stever and jharp.
SPQR (26be8b) — 9/20/2008 @ 6:32 pmHere is the Senate vote for Gramm-Leach-Bliley. Could someone point out Biden’s vote? Is that an aye or a nay. Sure looks like a nay to me.
I keep hearing people saying “Biden voted for it,” but I’m unsure where people are getting that information. The Senate record is publicly available…
NC (b4b303) — 9/20/2008 @ 6:32 pmNC, that’s not the conference report.
SPQR (26be8b) — 9/20/2008 @ 6:33 pmSPQR, this is the conference report.
NC (b4b303) — 9/20/2008 @ 6:40 pmSteve, no, I’m afraid not.
Tyler Cowan does some more schooling of Stever and jharp.
Your link is irrelevant to my claim.
Steve J. (832d68) — 9/20/2008 @ 6:42 pmAnd the “financial engineers” walked away with billions. And the taxpayers get the bill.
Comment by jharp — 9/20/2008 @ 6:23 pm
Yup, and the FIRED CEO’s also walked away with 10s of millions despite costing their firms 10s of BILLIONS. Wall Street is the home of No-Fault Capitalism.
Steve J. (832d68) — 9/20/2008 @ 6:43 pmAt a quick glance, that does indeed looks like the conference report, NC. Which has Biden voting “yea” on the final text of the GLB act which passes with high bipartisan support.
SPQR (26be8b) — 9/20/2008 @ 6:48 pmYes. And if Biden had voted no it still would have passed in both chambers. If the bill came out of conference and the Senate somehow reversed their vote because of the final language, Biden’s hypothetical nay vote on the language of the bill would have put the bill back into conference.
The bill was going to pass regardless. The only vote that mattered was the first one.
NC (b4b303) — 9/20/2008 @ 6:57 pmNC, no the first vote did not matter more than the second one. For one thing, the first vote was on a different text. Secondly, the second vote was veto-proof.
SPQR (26be8b) — 9/20/2008 @ 7:01 pmComment by NC — 9/20/2008 @ 6:32 pm
That’s not the final vote.
Another Drew (0d32b9) — 9/20/2008 @ 7:04 pmThe final vote on the conference report (the bill that was sent to WJClinton for his signature) was 90 Aye, 8 Nay, 1 Present, 1 Not Voting.
The only vote that mattered was the first one
Channelling Chevy Chase here:
No, NC, you ignorant slut, bills go to conference committees because they are different from each other (House & Senate). Then, each house has to vote again on the conference report which is the final version of the bill, and is an up-or-down vote with no amendments from the floor allowed.
Another Drew (0d32b9) — 9/20/2008 @ 7:13 pmSteve J argues the same points as #15, then tries to turn that on its head to promote less accountability.
That’s mixing up the ideas and coming out with a mess. You want accountability for CEO’s? That’s capitalism. You can guarantee the one solution that never affords accountability is government oversight. No-fault capitalism can only occur with government assistance.
Apogee (366e8b) — 9/20/2008 @ 7:13 pmAD,
Technically, I think you are channeling Dan Aykroyd, not Chevy Chase.
DRJ (0754ed) — 9/20/2008 @ 7:23 pm“And this on proposing handing our socail security over to the same crooks were bailing out.”
What are you talking about? Bush’s plan didn’t require people to put money into stocks.
You’re anti-choice.
Patterico (9afd88) — 9/20/2008 @ 7:34 pmThanks DRJ….I was usually blasted about 1130pm on a Sat in the 70’s, so I had a hard time keeping that clown show sorted out.
Another Drew (4692ec) — 9/20/2008 @ 8:16 pmBruce Bartlett
Menzie Chinn
Since no one here is an economist, or even willing to link to someone who is.
readnek (105b91) — 9/20/2008 @ 8:44 pmI’m waiting to see what Thomas Sowell, or Walter Williams, or Arthur Laffer have to say.
Another Drew (4692ec) — 9/20/2008 @ 8:51 pmApogee writes “You want accountability for CEO’s? That’s capitalism.”
That’s not capitalism as practiced in America.
Prince quit in early November as chief executive while Citigroup posted billions of dollars in subprime losses and O’Neal was ousted amid similar circumstances at Merrill Lynch.
Despite these problems, Merrill said O’Neal would collect about $161.5 million in stock awards and benefits after leaving. One expert estimated shortly after his resignation that Prince would depart Citi with about $31 million.
Steve J. (44fbb7) — 9/20/2008 @ 11:23 pmLINK
Steve J. – Were those previously vested awards, severence payments under a contract, or what?
daleyrocks (d9ec17) — 9/20/2008 @ 11:28 pm“Lefties regret this because they could use that money for other socialistic programs they want to pursue, like taking over the health care system.”
– Patterico
Universal healthcare in a bubble: doctors bill the government for dispensed care instead of billing insurance companies. Government raises taxes to cover the added expense. Everyone gets care – the same care, in my estimation, as they would get in our current system. Great “takeover”, you melodramatist.
And don’t cry that there won’t be enough specialists to take care of everyone in a timely manner: your beloved free market should take care of that little problem, right?
NO, WRONG!!
WOOO! Socialized Medicine! BOOGIDY BOOGIDY! Be afraid of Socialized Medicine!
Leviticus (41975c) — 9/21/2008 @ 7:55 amdoctors bill the government for dispensed care instead of billing insurance companies.
— And those companies do WHAT, dry up and disappear? And their employees do WHAT, all go to work for the UHC behemoth? And the government is going to absorb ALL of those jobs?
Government raises taxes to cover the added expense.
— I pay for my neighbor’s health care. No Thanks. Let them pay for their own.
Everyone gets care – the same care, in my estimation, as they would get in our current system.
— Maybe. And based on the reports of what takes place in other countries, that’s a BIG “maybe”.
And don’t cry that there won’t be enough specialists to take care of everyone in a timely manner: your beloved free market should take care of that little problem, right?
Icy Truth (b8f405) — 9/21/2008 @ 8:58 am— How exactly does the market remain FREE when you completely remove choice from one side of the equation?
Icy…
You ask too many inconvenient truths.
Remember, Leviticus is to be one of our best and brightest. He will simply lead by example in that swamp known as Capitol Hill, and lead the unenlighteded into salvation, and glory, and….
I hate it when I haven’t had my second cup of coffee, just go off into dreamland.
Another Drew (551fef) — 9/21/2008 @ 9:08 am#57, a must-read on the universal healthcare issue from Mike K who comments here. Its an excellent 4-part series that exposes a number of misconceptions re universal healthcare’s advantages, gives a great historical perspective and offers a reasonable modern day approach to the critical issue. Considering he has been a professional within the system for decades, he provides a valuable tool to more fully understanding the issue. Its a very good tutorial for all lay people.
http://abriefhistory.org/?p=216
Dana (4d3ea0) — 9/21/2008 @ 9:16 amBe careful. I might make a funny and cause you to spray your keyboard. 😉
Icy Truth (b8f405) — 9/21/2008 @ 9:17 amI’m tired of ideologically driven stupidity
Business Week on the French Health System
The last couple of sentences:
“But France isn’t likely to make major changes to a system most citizens say they like. Why would they? Says Shanny Peer, policy director at the independent French-American Foundation: “France gets better results for less money and everyone is covered.”
readnek (105b91) — 9/21/2008 @ 9:27 amGotta love the Drudge banking stories. “Europeans ridicule America’s money meltdown.” … “Treasury now wants to bail out foeign banks” (with large American operations). Does this make any sense? Of course Obama wants to give billions of your tax money to UN to ameliorate world poverty. Will this be kind of like the Oil for Food Scandal or the blue helmeted UN “peacekeepers” raping little girls, except it will be American taxpayers getting sodomized? And how come Koffi Anus and son are not in prison? Obamba wants to go after Bush and Cheney? Super Magic Negro should be in jail himself. He reminds me more and more of the arrogant, criminal asshole played by Denzel Washington in American Gangster. IMO screw Treasury, the Euroweenies, UN, Obambi and the ever obambi fellating media. When are people going to wake up and say enough? Won’t anyone ask the anointed shithead about all the money he took from the Freddies? Or about his advisors who were in on cooking the books?
madmax333 (0c6cfc) — 9/21/2008 @ 9:42 am“Be careful. I might make a funny and cause you to spray your keyboard.”
Icy…When I see your comment line, I always finish my drinking first, and set-down my cup, just to prevent those types of problems. The budget can’t stand an on-going keyboard replacement program.
Another Drew (551fef) — 9/21/2008 @ 9:48 amOnce again, if socialized medicine is so fecking great, why do so many Canadians and Europeans flock to the US to pay for prompt and comprehensive health care? How many people die or get worse waiting for various tests or are told that their potential procedureds will not be allowed or to get in a long ass line and wait lengthy periods of time for resolution?
I know France is said to have outstanding medical services. But you didn’t hear all that much about the elderly cheese eating surrender monkeys who croaked that one summer when everyone else was on vacation. What was it- 100,000 deceased? Of course the great US media never said all that much about the hundreds of French cities burning nightly because muslim yoot was upset about lack of jobs and such. Funny, the media did spew egregious lies about Katrina that were never corrected. And of course Euroweenies pointed to the fake horrors of the Superdome to attack Bush yet again.
madmax333 (0c6cfc) — 9/21/2008 @ 9:50 am“France gets better results for less money and everyone is covered.”
— Does that “less money” claim ever, EVER factor in the high income tax rate? (top rate of 52.75%)
Icy Truth (feba14) — 9/21/2008 @ 9:59 amDo you own Citigroup stock? If so, attend a shareholder’s meeting and voice your opinion. If not, STFU!! It’s not your business what he makes. He’s not taking money out of your pocket. Dont do business w/ the company if it upsets you. And that is capitalism.
chas (e36377) — 9/21/2008 @ 10:04 amAnd where is the US getting the $$$?
“..Andy Xie, an independent economist who was formerly Morgan Stanley’s chief Asia economist, said the United States needs to accept that a large amount of U.S. assets must be transferred to other countries’ ownership. “If the U.S. is not willing to accept that,” Xie said, “they will have to print money and the dollar will fall. And we will be headed toward a global financial meltdown.”
readnek (105b91) — 9/21/2008 @ 10:20 amI wonder what the Chinese Gov’t will pay for the National Park System?
Or, we could sell a couple National Forests to the Indian Gov’t?
What is ANWR worth?
Of course, every time in the past that foreign investors bought up American properties with the concomittant caterwauling of …. buying up America, when their economy cratered, they sold those properties back at dimes on the dollar – anyone remember Pebble Beach, or Rockefeller Center?
Another Drew (551fef) — 9/21/2008 @ 10:25 amTop US Marginal Income Tax Rates, 1913–2003
1913 7 500,000
readnek (105b91) — 9/21/2008 @ 10:25 am1914 7 500,000
1915 7 500,000
1916 15 2,000,000
1917 67 2,000,000
1918 77 1,000,000
1919 73 1,000,000
1920 73 1,000,000
1921 73 1,000,000
1922 58 200,000
1923 43.5 200,000
1924 46 500,000
1925 25 100,000
1926 25 100,000
1927 25 100,000
1928 25 100,000
1929 24 100,000
1930 25 100,000
1931 25 100,000
1932 63 1,000,000
1933 63 1,000,000
1934 63 1,000,000
1935 63 1,000,000
1936 79 5,000,000
1937 79 5,000,000
1938 79 5,000,000
1939 79 5,000,000
1940 81.1 5,000,000
1941 81 5,000,000
1942 88 200,000
1943 88 200,000
1944 94 200,000
1945 94 200,000
1946 86.45 200,000
1947 86.45 200,000
1948 82.13 400,000
1949 82.13 400,000
1950 84.36 400,000
1951 91 400,000
1952 92 400,000
1953 92 400,000
1954 91 400,000
1955 91 400,000
1956 91 400,000
1957 91 400,000
1958 91 400,000
1959 91 400,000
1960 91 400,000
1961 91 400,000
1962 91 400,000
1963 91 400,000
1964 77 400,000
1965 70 200,000
1966 70 200,000
1967 70 200,000
1968 75.25 200,000
1969 77 200,000
1970 71.75 200,000
1971 70 60 200,000
1972 70 50 200,000
1973 70 50 200,000
1974 70 50 200,000
1975 70 50 200,000
1976 70 50 200,000
1977 70 50 203,200
1978 70 50 203,200
1979 70 50 215,400
1980 70 50 215,400
1981 69.125 50 215,400
1982 50 85,600
1983 50 109,400
1984 50 162,400
1985 50 169,020
1986 50 175,250
1987 38.5 90,000
1988 28 29,750
1989 28 30,950
1990 28 32,450
1991 31 82,150
1992 31 86,500
1993 39.6 89,150
1994 39.6 250,000
1995 39.6 256,500
1996 39.6 263,750
1997 39.6 271,050
1998 39.6 278,450
1999 39.6 283,150
2000 39.6 288,350
2001 39.1 297,350
2002 38.6 307,050
2003 35 311,950
Comment by readnek — 9/21/2008 @ 10:25 am
Too bad that isn’t indexed, from the beginning, for inflation – the resulting numbers would be truly shocking.
Also, what percentage of the population was subject to the top marginal rate in each of those years?
Another Drew (551fef) — 9/21/2008 @ 10:30 am“The root cause of this financial crisis is bad home mortagages.”
True, as far as it goes, but the real question is, why were so many bad mortgages made in such a short period of time?
The Secondary Mortgage Market (largely Fannie and Freddy) is designed to absorb an expected level of delinquencies, the level rises and falls with economic fluctuations, and has functioned well in that capacity for many years.
The roots of this crisis are to be found in recently peomulgated changes in long established lending practices. Over time, institutional lenders have developed simple and straightforward criteria to judge the qualifications of prospective borrowers. These methods have stood the test of time and are not perfect, but they are highly reliable. Had lending standards remained in place this crisis would never have occured.
Why then were the well established and highly reliable yardsticks of mortgage lending replaced with irregular measures which have failed so quickly and on such a grand scale? Who has the power to make those changes, and who benefits?
Answer those questions and you will understand how we got into this mess. The information is important because it will also inform us how we can avoid a repetition.
Ropelight (b9f273) — 9/21/2008 @ 11:02 am“The root cause of this financial crisis is bad home mortagages.” No
“The Secondary Mortgage Market (largely Fannie and Freddy” Absolute Bullshit
Read
The piece is full of links. read them.
Also of interest
readnek (105b91) — 9/21/2008 @ 11:15 amreadnek – Bullshit. If the originators of the loans, whether mortgage brokers or banks, faced the prospect of keeping huge quantities of subprime or Alt-A loans on their books, they would not have made them. Absent some form of credit enhancement, the capital cost to the banks of retaining such loans is high. They looked for the best execution strategy of ridding themselves of the loans – selling them to Fannie or Freddie, to a Wall Street conduit, or pooling them themselves. Different forms of credit enhancement if needed could be purchased under varying scenarios. The availability of Fannie and Freddie as quasi government money just created competition for the private sector.
daleyrocks (d9ec17) — 9/21/2008 @ 11:34 amSteveJ writes: That’s not capitalism as practiced in America.
Which explains the problems with the system. Government screws up the system by protecting failure, encouraging failure (by giving bailouts with no consequences) or practicing failure (using regulation as a favor to select donors instead of keeping a system running). The cry is always accountability for the CEO’s, and I agree with that call. Where I disagree is the same people always fail to recognize that the government faces no accountability itself (will the SEC be disbanded?), and then look to government for the solution by claiming ‘capitalism doesn’t work’. Capitalism works best when its not sabotaged by government.
Apogee (366e8b) — 9/21/2008 @ 1:37 pm“And those companies do WHAT, dry up and disappear? And their employees do WHAT, all go to work for the UHC behemoth? And the government is going to absorb ALL of those jobs?”
– Icy Truth
Maybe. Probably not. Most of those people will probably be able to go out and find real jobs doing something besides extorting the general populace under a faux-fatherly guise, but for those who simply can’t adjust, there are always jobs open in the New Jersey protection rackets.
“I pay for my neighbor’s health care. No Thanks. Let them pay for their own.”
– Icy Truth
Yes. You help the needy in the process of helping yourself, at some additional cost to yourself. It’s called “compassion”.
“Maybe. And based on the reports of what takes place in other countries, that’s a BIG “maybe”.”
– Icy Truth
Other countries? Like Sweden? Like Japan?
“How exactly does the market remain FREE when you completely remove choice from one side of the equation?”
– Icy Truth
Are you going to pretend that the supply of doctors wouldn’t swell with the increase in demand resulting from a universal health care mandate?
Leviticus (41975c) — 9/21/2008 @ 1:41 pmAre you going to pretend that the supply of doctors wouldn’t swell with the increase in demand resulting from a universal health care mandate?
It hasn’t happened in any country that socialized its’ healthcare system.
In fact, during the 50’s & 60’s, the emigration of MD’s from Britain was a primary component of the “brain drain” that was critical to the Brit economy.
And, there is the ongoing example here in the ‘States over doctors opting out of Medicare.
Another Drew (551fef) — 9/21/2008 @ 1:56 pmIT APPEARS OUR ELECTED OFFICIALS IN D.C. ARE INSANE. A 700B BAILOUT IS NOT ACCEPTABLE, NOT NOW, NOT EVER. HOW ABOUT BAILING ME OUT? WE, THE TAXPAYERS, ALL HAVE DEBTS. I HAVE NOT HEARD OF UNCLE SAM BAILING US OUT. YOU PEOPLE IS D.C. HAVE ALLOWED THIS MESS TO HAPPEN. CLEAN IT UP. GET TO WORK! THAT’S WHAT WE PAY YOU FOR!
Monica (3a74c2) — 9/25/2008 @ 2:13 pm