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<DIV><FONT face=Arial size=3>If I recall, George Bailey saved the savings and
loan, and Potter got everything else.</FONT></DIV>
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style="PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style="FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black"><B>From:</B>
<A title=donaledwards@hotmail.com
href="mailto:donaledwards@hotmail.com">donald edwards</A> </DIV>
<DIV style="FONT: 10pt arial"><B>To:</B> <A title=vision2020@moscow.com
href="mailto:vision2020@moscow.com">vision2020@moscow.com</A> </DIV>
<DIV style="FONT: 10pt arial"><B>Sent:</B> Friday, September 26, 2008 11:20
AM</DIV>
<DIV style="FONT: 10pt arial"><B>Subject:</B> Re: [Vision2020] Vision2020
Digest, Vol 27, Issue 258</DIV>
<DIV><BR></DIV>Shouldn't we let those that have the most invested in wall
street; thus, the most to lose bail themselves out. Why not let 700 of
the world's billionaires each contribute a paultry billion to the cause and if
it's a good investment they'll get the return, right?<BR> <BR>If they're
unwilling to buy these securities then why should we? The rich are the
one's buying up the discounted shares right now anyway. Who benefitted
the most from the collapse of the 30's? Those that panic'd and sold out
or those that swooped in and bought up the discounted shares?<BR><BR><BR>>
From: vision2020-request@moscow.com<BR>> Subject: Vision2020 Digest, Vol
27, Issue 258<BR>> To: vision2020@moscow.com<BR>> Date: Fri, 26 Sep 2008
11:06:46 -0700<BR>> <BR>> Send Vision2020 mailing list submissions
to<BR>> vision2020@moscow.com<BR>> <BR>> To subscribe or unsubscribe
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http://mailman.fsr.com/mailman/listinfo/vision2020<BR>> or, via email, send
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replying, please edit your Subject line so it is more specific<BR>> than
"Re: Contents of Vision2020 digest..."<BR>> <BR>> <BR>> Today's
Topics:<BR>> <BR>> 1. Re: [spam] Re: Debate about the bailout (Sunil
Ramalingam)<BR>> 2. Re: Debate about the bailout
(nickgier@roadrunner.com)<BR>> <BR>> <BR>>
----------------------------------------------------------------------<BR>>
<BR>> Message: 1<BR>> Date: Fri, 26 Sep 2008 10:53:45 -0700<BR>>
From: Sunil Ramalingam <sunilramalingam@hotmail.com><BR>> Subject:
Re: [Vision2020] [spam] Re: Debate about the bailout<BR>> To:
<vision2020@moscow.com><BR>> Message-ID:
<BAY111-W33CDEFD515CEC05F01AF96BD470@phx.gbl><BR>> Content-Type:
text/plain; charset="iso-8859-1"<BR>> <BR>> <BR>> As I understand the
facts, the Patriot Act was introduced after 9/11, and passed just a few weeks
later. I don't believe it was introduced while Bill Clinton was still in
office (though I would not have been surprised if he signed it.)<BR>>
<BR>> Sunil<BR>> <BR>> Date: Fri, 26 Sep 2008 10:19:41 -0700<BR>>
To: sunilramalingam@hotmail.com<BR>> From: jeffh@moscow.com<BR>>
Subject: Re: [spam] Re: [Vision2020] Debate about the bailout<BR>> <BR>>
<BR>> <BR>> The Patriot Act was debated for a year before
passage.<BR>> <BR>> <BR>> At 09:35 AM 9/26/2008, you wrote:<BR>>
<BR>> Bruce,<BR>> <BR>> <BR>> I won't pretend that I have an
understanding of this issue. But I<BR>> do have a memory, and I recall this
administration rushing a major piece<BR>> of legislation through: The
'Patriot' Act. Without much (if any)<BR>> review Congress abdicated their
responsibility and rubber-stamped the<BR>> bill. The sky was going to fall
if it didn't get passed. <BR>> Butch Otter gets credit for voting 'No' on
it.<BR>> <BR>> <BR>> Now again there's a rush to get this through.
This time it doesn't<BR>> affect anything as meaningless as our rights,
it's money, so it's getting<BR>> more scrutiny. Good. <BR>> <BR>>
<BR>> I'm not saying that perhaps it isn't necessary. I do want
Congress<BR>> to examine it and debate it before they pass it.<BR>>
<BR>> <BR>> Sunil<BR>> <BR>> <BR>> <BR>> Date: Fri, 26 Sep
2008 07:47:44 -0700<BR>> <BR>> From: jeanlivingston@turbonet.com<BR>>
<BR>> To: vision2020@moscow.com<BR>> <BR>> Subject: [Vision2020]
Debate about the bailout<BR>> <BR>> <BR>> The nation has tried to
rush to a bailout solution based on the seeming<BR>> consensus that the
financial markets, credit in particular, will collapse<BR>> or freeeze to
our great and lasting detriment if a "deal" is<BR>> not obtained this
week.<BR>> <BR>> <BR>> Senator McCain "suspended" his campaign and
refuses to<BR>> participate in tonight's scheduled debate unless the deal,
or at least an<BR>> agreed structure of the deal, is reached before it is
time to fly to<BR>> Mississippi for the debate. He, too, seems to accept
the concept,<BR>> touted by bureaucrats and Wall Street economists alike
and reiterated by<BR>> politicians of all stripes, that an immediate
agreement upon a deal is<BR>> absolutely crucial.<BR>> <BR>> <BR>>
<BR>> We are trying in one week to structure and agree upon the
largest<BR>> financial deal in our history. George Will aptly termed
this<BR>> phenomenon as acting like "lemmings in reverse," as
everyone<BR>> rushes pell mell away from the proverbial cliff, from which
lemmings<BR>> suppose! dly leap as they blindly follow the lemming in front
of<BR>> them. It seems to me that getting a deal of this magnitude
done<BR>> well in a considered fashion is more important than getting it
done this<BR>> week. That idea of "getting it right" seems to be
taking<BR>> root. Note the article reprinted below, which talks at length
about<BR>> the split in "expert" opinion on how to structure the<BR>>
bailout. <BR>> <BR>> <BR>> All that being said, it appears that a
deal may not be reached this week<BR>> due to the complexity of the
situation and well meaning politicians,<BR>> conservatives and liberals
alike, now struggling to "get it<BR>> right." In my opinion, debate on this
issue and "getting<BR>> it right" is paramount. <BR>> <BR>> <BR>>
For me, the importance of "debate" on the issue also means<BR>> getting the
two presidential candidates discussing it openly in public<BR>> for the
nation to hear, tonight. <BR>> <BR>> <BR>> If a deal in Congress is
reached today in time for the deb! ate tonight,<BR>> wonderful. If a deal
is not reached, I think Senator McCain ought<BR>> to hop on that plan and
attend the scheduled debate, notwithstanding his<BR>> offer to "put the
nation first" by sitting in Washington. <BR>> Certainly, getting the deal
done right in Congress is important. <BR>> But skipping an hour and a half
presidential debate -- when the financial<BR>> markets will be closed for
the next two days -- makes no sense to<BR>> me. Skipping the debate does
not materially advance getting the<BR>> deal done right in a time frame
that matters. We need to hear what<BR>> Senator McCain has to say, and why
his ideas are better or worse than<BR>> Senator Obama's. As debate grows
about the wisdom of the structured<BR>> bailout deal being proposed, the
need for debate by our presidential<BR>> candidates likewise grows.<BR>>
<BR>> <BR>> Bruce Livingston<BR>> <BR>> <BR>> Away from Wall
Street, Economists Question Basis of<BR>> Paulson's Plan<BR>> <BR>>
<BR>> <BR>> By Neil Irwi! n and Cecilia Kang<BR>> <BR>> Washington
Post Staff Writers<BR>> <BR>> Friday, September 26, 2008; A01<BR>>
<BR>> <BR>> <BR>> <BR>> The Bush administration's pitch for a
sweeping bailout of the financial<BR>> system has centered on two simple
premises: that the economy could suffer<BR>> a crippling downturn if action
is not taken very quickly and that this<BR>> action should consist of the
government buying troubled mortgage<BR>> securities from banks and other
institutions.<BR>> <BR>> But many of the nation's top economists
disagree with one or both of<BR>> those ideas, even as many top political
leaders have swung behind<BR>> them.<BR>> <BR>> <BR>> Wall Street
economists have mostly endorsed Treasury Secretary<BR>> <BR>> Henry M.
Paulson Jr.'s plan, or a variation thereof.<BR>> <BR>> But almost 200
academic economists -- who aren't paid by the institutions<BR>> that could
directly ! benefit from the plan but who also may not have<BR>> recent
practical experience in the markets -- have signed a petition<BR>>
organized by a<BR>> <BR>> University of Chicago professor objecting to
the plan on the grounds<BR>> that it could create perverse incentives, that
it is too vague and that<BR>> its long-run effects are unclear.<BR>>
<BR>> Sen. Richard C. Shelby (Ala.), ranking Republican on the
Budget<BR>> Committee, brandished that letter yesterday afternoon as he
explained his<BR>> opposition to the bailout outside a bipartisan summit at
the<BR>> <BR>> White House. The petition did not advocate any specific
plan,<BR>> including that offered yesterday by House Republicans.<BR>>
<BR>> Economists tend to agree that the nation's economy is at serious risk
as<BR>> the flow of credit threatens! to freeze. Just yesterday, the
interest<BR>> rate at which banks lend to each other rose steeply, as it
has every day<BR>> this week, suggesting that lenders are hoarding cash.
History shows that<BR>> when this happens, a broad economic crisis can
follow, for instance, the<BR>> Great Depression and Japan's decade-long
recession in the 1990s.<BR>> <BR>> "If nothing is done, the potential
for these markets to seize up in<BR>> a big way is definitely there," said
Frederic S. Mishkin, an<BR>> economist at<BR>> <BR>> Columbia
University who was a<BR>> <BR>> Federal Reserve governor until last
month. "When you look at the<BR>> history of these crises, when things spin
out of control, the cost to fix<BR>> it later goes up
exponentially."<BR>> <BR>> But many others with a deep theoretical
knowledge of finance and<BR>> experience in government are ske! ptical of
the structure of Paulson's<BR>> plan -- and the speed with which it has
been crafted.<BR>> <BR>> The critics can be roughly divided into two
camps. One group thinks money<BR>> should be directly infused into banks,
which should allow it to trickle<BR>> down through the financial system to
borrowers. A second group thinks the<BR>> government should buy individual
mortgages, thus helping ordinary<BR>> Americans more directly, with the
benefits trickling up to the<BR>> banks.<BR>> <BR>> The plan promoted
by Paulson and<BR>> <BR>> Fed Chairman Ben S. Bernanke is somewhere in
between: buying up<BR>> packages of mortgages and hoping that the benefits
spread both up to<BR>> banks and down to households.<BR>> <BR>> "The
plan is a trickle-down approach from banks to Main<BR>> Street," said Alan
S. Blinder, a professor at<BR>> <BR>> Princeton University. "But if you!
reduce the flood of<BR>> foreclosures and defaults" -- which he would have
the government do<BR>> by buying loans directly and then renegotiating the
terms -- "it<BR>> will make mortgage-backed securities worth more."<BR>>
<BR>> That might help ordinary Americans but would be extremely difficult
to<BR>> administer. The government would have to make decisions on
the<BR>> foreclosure and resale of individual houses all over the country.
Still,<BR>> many economists with left-of-center political views favor some
variation<BR>> of this approach to the plan endorsed by Bush.<BR>>
<BR>> "There is a kind of suggestion in the Paulson proposal that if
only<BR>> we provide enough money to financial markets, this problem
will<BR>> disappear," said Joseph Stiglitz, a Nobel Prize-winning
economist.<BR>> "But that does nothing to address the fundamental problem
of<BR>> bleeding foreclosures and the holes in the balance sheets
of<BR>> banks."<BR>> <BR>> Coming from the other direction, more
conservative economists worry that<BR>> by having t! he government buy
mortgage securities, the Paulson plan<BR>> would manipulate prices in that
market without getting at the nub of the<BR>> problem: that banks do not
have enough capital and are having difficulty<BR>> raising any on private
markets.<BR>> <BR>> In a sign of how the debate over the economy has
shifted in recent weeks,<BR>> some conservatives, even as they argue for a
relatively limited<BR>> government role, are calling on the government to
invest public money in<BR>> private banks.<BR>> <BR>> "The root of
the issue is recapitalizing banks," said Glenn<BR>> Hubbard, dean
of<BR>> <BR>> Columbia Business School and a former chairman of<BR>>
<BR>> President Bush's Council of Economic Advisers. "That could be<BR>>
done more efficiently through the government injection of preferred<BR>>
equity. Then the market coul! d figure out the prices of the<BR>>
assets."<BR>> <BR>> Many of these critics don't care for the assumption
behind the<BR>> administration's plan that the market is now pricing these
mortgage<BR>> securities incorrectly, a problem that the government
intervention aims<BR>> to fix.<BR>> <BR>> "The premise appears to be
that the market is irrationally<BR>> pessimistic," wrote Greg Mankiw,
a<BR>> <BR>> Harvard University economist and another former Bush
economic<BR>> adviser, on his blog this week. "That might be so.
Nonetheless, one<BR>> has to be at least a bit skeptical about the idea
that government<BR>> policymakers gambling with other people's money are
better at judging the<BR>> value of complex financial instruments than are
private investors<BR>> gambling with their own."<BR>> <BR>> Some
conservatives are now arguing, notably, that the government should<BR>> be
investing in banks.<BR>> <BR>> Many economists fault the Bush
administration and C! ongress for moving<BR>> so quickly on the bailout
package without allowing more time for debate.<BR>> That sentiment was
reflected in the petition organized by John Cochrane<BR>> of the University
of Chicago. (None of the economists quoted here were<BR>>
signatories.)<BR>> <BR>> "I totally disagree that this needs to be done
this week. It's more<BR>> important to get it right," Blinder said.<BR>>
<BR>> Moreover, some economists said the proposed $700 billion may not
be<BR>> enough to address all the problems stretching across the
financial<BR>> landscape. "You only show up if you can win, and this is not
that<BR>> package," said Simon Johnson, a professor at<BR>> <BR>>
Massachusetts Institute of Technology and former chief economist at<BR>>
the<BR>> <BR>> International Monetary Fund. "This cannot be the
ultimate, deci!<BR>> sive solution if you are not addressing the underlying
cause."<BR>> <BR>> The plan is short on details, instead giving the
Treasury secretary wide<BR>> latitude to determine how to execute the
purchases of mortgage<BR>> securities.<BR>> <BR>> "I'd like to see
how they see the evolution of an end game. There<BR>> are still many
questions," said Myron Scholes, a retired professor<BR>> at<BR>>
<BR>> Stanford University and Nobel Prize winner. He said how long
the<BR>> government holds the assets and how they are later resold would be
the<BR>> keys to determining whether the plan works.<BR>> <BR>>
<BR>> <BR>> <BR>>
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<BR>> <BR>> ------------------------------<BR>> <BR>> Message:
2<BR>> Date: Fri, 26 Sep 2008 14:06:44 -0400<BR>> From:
<nickgier@roadrunner.com><BR>> Subject: Re: [Vision2020] Debate about
the bailout<BR>> To: Sunil Ramalingam
<sunilramalingam@hotmail.com><BR>> Cc: vision2020@moscow.com<BR>>
Message-ID:<BR>>
<27430943.620641222452404959.JavaMail.root@cdptpa-web04-z01><BR>>
Content-Type: text/plain; charset=utf-8<BR>> <BR>> Good Morning
Visionaries:<BR>> <BR>> This column by Paul Krugman is the best I've
seen on the bail out. The best parts about the current plan is limiting the
first installment to $250 billion and the all important "equity
sharing."<BR>> <BR>> People are rightly critical of the $700 billion
price tag, but nobody, except me, has pointing out that giving every American
family or individual $5,000 or $2,500 for their health care would cost $810
billion. McCain would get $360 billion from new taxes on employee health
premiums (which would knock at 20 million people off these secure and
comprehensive plans), but there would still be a $450 billion deficit for very
little health coverage in return.<BR>> <BR>> Nick Gier<BR>> <BR>>
September 26, 2008<BR>> The New York Times<BR>> Where Are the
Grown-Ups?<BR>> By PAUL KRUGMAN<BR>> <BR>> Many people on both the
right and the left are outraged at the idea of using taxpayer money to bail
out America?s financial system. They?re right to be outraged, but doing
nothing isn?t a serious option. Right now, players throughout the system are
refusing to lend and hoarding cash ? and this collapse of credit reminds many
economists of the run on the banks that brought on the Great
Depression.<BR>> <BR>> It?s true that we don?t know for sure that the
parallel is a fair one. Maybe we can let Wall Street implode and Main Street
would escape largely unscathed. But that?s not a chance we want to
take.<BR>> <BR>> So the grown-up thing is to do something to rescue the
financial system. The big question is, are there any grown-ups around ? and
will they be able to take charge?<BR>> <BR>> Earlier this week, Henry
Paulson, the Treasury secretary, tried to convince Congress that he was the
grown-up in the room, come to protect us from danger. And he demanded total
authority over the rescue: $700 billion to be used at his discretion, with
immunity for future review.<BR>> <BR>> Congress balked. No government
official should be entrusted with that kind of monarchical privilege, least of
all an official belonging to the administration that misled America into war.
Furthermore, Mr. Paulson?s track record is anything but reassuring: he was way
behind the curve in appreciating the depth of the nation?s financial woes, and
it?s partly his fault that we?ve reached the current moment of
meltdown.<BR>> <BR>> Besides, Mr. Paulson never offered a convincing
explanation of how his plan was supposed to work ? and the judgment of many
economists was, in fact, that it wouldn?t work unless it amounted to a huge
welfare program for the financial industry.<BR>> <BR>> But if Mr.
Paulson isn?t the grown-up we need, are Congressional leaders ready and able
to fill the role?<BR>> <BR>> Well, the bipartisan ?agreement on
principles? released on Thursday looks a lot better than the original Paulson
plan. In fact, it puts Mr. Paulson himself under much-needed adult
supervision, calling for an oversight board ?with cease and desist authority.?
It also limits Mr. Paulson?s allowance: he only (only!) gets to use $250
billion right away.<BR>> <BR>> Meanwhile, the agreement calls for limits
on executive pay at firms that get federal money. Most important, it ?requires
that any transaction include equity sharing.?<BR>> <BR>> Why is that so
important? The fundamental problem with our financial system is that the
fallout from the housing bust has left financial institutions with too little
capital. When he finally deigned to offer an explanation of his plan, Mr.
Paulson argued that he could solve this problem through ?price discovery? ?
that once taxpayer funds had created a market for mortgage-related toxic
waste, everyone would realize that the toxic waste is actually worth much more
than it currently sells for, solving the capital problem. Never say never, I
guess ? but you don?t want to bet $700 billion on wishful thinking.<BR>>
<BR>> The odds are, instead, that the U.S. government will end up having to
do what governments always do in financial crises: use taxpayers? money to
pump capital into the financial system. Under the original Paulson plan, the
Treasury would probably have done this by buying toxic waste for much more
than it was worth ? and gotten nothing in return. What taxpayers should get is
what people who provide capital are entitled to: a share in ownership. And
that?s what the equity sharing is about.<BR>> <BR>> The Congressional
plan, then, looks a lot better ? a lot more adult ? than the Paulson plan did.
That said, it?s very short on detail, and the details are crucial. What prices
will taxpayers pay to take over some of that toxic waste? How much equity will
they get in return? Those numbers will make all the difference.<BR>>
<BR>> And in any case, it seems that we don?t have a deal.<BR>> <BR>>
This has to be a bipartisan plan, and not just at the leadership level.
Democrats won?t pass the plan without votes from rank-and-file Republicans ?
and as of Thursday night, those rank-and-file Republicans were
balking.<BR>> <BR>> Furthermore, one non-rank-and-file Republican,
Senator John McCain, is apparently playing spoiler. Earlier this week, while
refusing to say whether he supported the Paulson plan, he claimed not to have
had a chance to read it; the plan is all of three pages long. Then he inserted
himself into the delicate negotiations over the Congressional plan, insisting
on a White House meeting at which he reportedly said little ? but during which
consensus collapsed.<BR>> <BR>> The bottom line, then, is that there do
seem to be some adults in Congress, ready to do something to help us get
through this crisis. But the adults are not yet in charge.<BR>> <BR>>
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