You are correct. Jobs, Hardwork, education, and increasing the capacity to pay of the families and individuals are the fundamentals that will dictate whether we can solve this crisis or not. These are real resources that cannot be washed away by the financial (i.e.not real physical asset) market.

I was also angry with McCain when I heard his additional bailout plan during the 2nd debate.

But when I reviewed the details from his website, McCain’s plan is precisely “what we really need to solve the crisis”…helping only good families who entered into mortgage but were hit by the crisis.

Evictions lead to re-sale and immediate devaluation of the value of property. That’s the real cause of the housing mortgage. We need to avoid this if we can guarantee that the beneficiary family is good and trustworthy.

McCain’s solution is only addressing the grassroot and the people worthy to be saved. It’s not socialism. It’s really populism… we backing up the people and we are not supporting a system and government agencies that will take away the desire of the people to make their own choices and decisions to improve themselves. We just want to help them in this time of crisis.

Paulsen/Dems plan of primarily saving the GSEs and the large corporations directly by the government bailout is irresponsible because, in addition to good families and individuals, the government will technically bear the costs of the following:

1. Inefficiencies and corruption of these large corporations and GSEs.

2. Fraudulent transactions.

3. The technical mistake of allowing “unqualified” families to acquire housing loans.

Like me, Pejman, I re-grouped myself and find McCain’s plan more reasonable.

For me, you’re not a contrarian.

We are in a massive financial crisis. Yes, the news abounds in exaggeration, but the economy isn’t doing great right now. It’s strong in the sense that we will rebound, but it’s not performing well at the moment.

At least since the last 2 of Clinton. Gas prices rose, as well as groceries. The mortgage meltdown is but a symptom, same as the energy crisis of the late ’70′s.

That said, ill-thought policies by book-smart idiots like Carter and the current lib congress have a lot to do with the problem. I fail to see why it would be a bad thing to have citizen oversight (term limits) on our elective ‘representatives’. If it’s good enough to limit the Prez…

The FDIC encourages banks to make bad loans. Depositors can deposit their money in a bank with no concern about whether the bank maintains careful and sound lending practices. If the bank goes belly up, the depositor gets bailed out by the taxpayer.

The FDIC also assigns risk scores to the assets held by banks. It just so happens that the FDIC assigns a higher risk score to a home mortgage where the borrower put 20 percent down than it does to a mortgage backed security backed by mortgages where the borrower put less than 10 percent down.

So, the FDIC has also been complicit in this credit bubble. It has joined many other Federal agencies in twisting the arms of banks to make loans to unqualified borrowers.

The FDIC policy of encouraging bad loans includes a carrot and a stick.

The risk scoring is the stick, because the risk scores determine whether a bank is considered to have met its reserve requirement.

The taxpayer funded deposit insurance is the carrot. The bank gets all of the profit if a high risk loan is paid back in full. But the taxpayer will pay the bill if the bank goes bankrupt as a result of a series of risky loans gone bad.

we could be entering into a depression.

Why should individuals, businesses, or governments invest in the US economy when an BHO administration could institute policy that devalues your assets or confiscates the return on your investment?

That is what caused the crash of 1929 to turn into a depression according to Amty Shlaes’ book The Forgottne Man.

The market crash of 1987 was as bad as 1929, but Reagan took the bold action of restraining the government. He cut taxes and we got unprecidented growth throughout the ’90s.

At the heart of all BHO change is government interference in the free market. Why should individuals, businesses, governments feel they can accurately judge the risk involved in an enterprise?

I firmly believe the post-bailout global market crash is due in large part to the uncertainty around BHO policy and the movement in the polls in favor of BHO. The other major part (I believe) is that the bailout didn’t fix the problem. Investors know it.

This is the best part of that column you linked to:

I know that most everyone has been saying for a couple of weeks that something has to be done; a banking crisis could quickly become a wider crisis, pulling the rest of us down. For this reason, the Wall Street bailout is supposed to be better than no plan at all.

Too bad this line of thinking is seriously flawed. The non-financial sectors of our economy will not suffer much from even a prolonged banking crisis, because the general economic importance of banks has been highly exaggerated.

Although banks perform an essential economic function — bringing together investors and savers — they are not the only institutions that can do this. Pension funds, university endowments, venture capitalists and corporations all bring money to new investment projects without banks playing any essential role. The average corporation gets about a quarter of its investment funds from the profits it has after paying dividends — and could double or even triple that amount by cutting its dividend, if necessary.

What’s more, it’s not as if banking services are about to vanish. When a bank or a group of banks go under, the economywide demand for their services creates a strong profit motive for new banks to enter the marketplace and for existing banks to expand their operations. (Bank of America and J. P. Morgan Chase are already doing this.)

Excellent points. We do not need bankers to become just another welfare client along with farmers, the elderly, the poor and college students.

The attitude we seem to have today is “let’s put banks on welfare because they are so important to our economy.” That’s a bad idea. And I am surprised to see so many conservatives endorsing.

It’s a bit like seeing conservatives endorse Richard Nixon’s wage and price controls because, hey, he’s a Republican and if he’s supporting it, it must be a good idea.

The liberal media that is working desperately to put Obama in the White House is delighted to tell you every day how terrible things are economically and in every other way. This financial crisis comes at an opportune time for the majority of the media and the result is effecting the markets in a very negative way.

The stock market, it seems to me, might just be responding in part to the very notion that Obama is ahead in the polls since he intends to raise taxes and much more, making trust in the markets plummet. This all when the liberal policies of handing mortgages and government interference in bank policies is what caused the initial problem.

While I agree that the economy is strong too, there is an underlying flaw trying to be corrected; the credit market.

I have been following this very closely and right now, the potential for a large scale economic catastrophe is possible. Not because of some strange weak economy, but because of the inability to receive any credit. If this occurs, then many, many jobs will be lost because business will be forced to run daily operations, specifically payroll (which is what concerns me) on a cash basis.

Let’s throw noticeable layoffs, lack of credit availability and the resulting slow down of business in general, and that, in my opinion provides us with the recipe for a serious economic problem. Depression 2.0, probly not, but likely the worst economy since.

I listen to talk show host Bruce Williams frequently. He provides a unique perspective on the issue. Being considerably older, then the usual host (at least 75) he has a different perspective having seen more.

No, I don;t think we are that bad off, but it could get there. And I for one am very worried about it.

I think the economy was fine until the energy price increases.

The price of gas forced people to cut back and we will just start to see the reports of it.

The double whammy of energy and financial is going to cause this to be a deep, tough recession.

But we’ll be fine. We always are.

I want to see the Dow test its lows again.
I just dream of being rich enough to buy a nice Texas round lot of Berkshire Hathaway in the next couple of months.
I went to cash when Bear Stearns went under, by the way

I have an MBA and worked in banks for 13 years prior to doing real estate consulting work beginning in 1991. I worked for SunTrust, then a large super-regional bank (still is, and well capitalized). I remember the origins of CRA and I served for a time on the Tampa Bay Black Business Investment board, which was founded by a consortium of large banks in the city to fund minority startups. There was indeed pressure to loosen credit standards, but it worsened as the years progressed. I remember an edict from our credit people to fund no residential land development deals based a real bad experience from the past. My first assignment was working out of non-performing assets acquired during the Carter era. My next job was to book residential home loans which NEVER exceeded 80% based on a conservative appraisal. We verified everything, and payment ratios had to well within guidelines. By the time I refinanced my home loan in January 2006, my mortgage broker didn’t even ask for my tax returns, and I doubt he verified employment. While in banking, I also experienced the downturn in 1987, but we seemed to work out of that eventually, but that gave rise to RTC. So I have enough history under my belt to know that there are cycles, periods of lax credit and periods of belt tightening. This is Gen X’s turn at it, since they apparently were not students of history, or we Baby Boomers were too busy funding travel weddings and five-year college programs for our spoiled kids. I also know first hand about this because I was immersed in the land aquisition boon here in Central Florida with developers fighting tooth and nail for property, houses going up so fast it made our heads spin, and ranchers and grove owners making a vitual killing. GREED was the motivator, and now we suffer from it. Perhaps, this downturn will be harder to shrug off because of its global proportions, but I’ve got to believe without government assistance we can ride this out. We have before.

The fundamentals of our economy are strong. He emphasized (in a speech he gave in the heart of Obama land itself, the University of Chicago) that the non financial side of the economy–the “real side”–many of the usual indicators of a country’s economic health are quite good. Becker, the 1992 Nobel prize winner, emphasized the importance of encouraging this side of the economy to grow. And how does one do this? In Becker’s terms: replace the income tax with a consumption tax (or at least replace the progressive elements of the tax with a flat tax), repeal Sarbanes-Oxly, eliminate the capital gains tax, abolish Fannie and Freddy (nationalize it, make it solvent, then sell off it’s assets) , and expand drilling and natural gas exploration. This would at least allow the non-financial part of the economy to better weather the storm that will, in his words, “take several years to resolve.”

We have gone through a Plummeting value of the dollar. Not falling. Plummeting. Last time that sort of thing happened to any nation, instant recession.

We have gone through skyrocketing oil and gas prices. The blood of our economy. The last time that happened, we were talking about the “Misery Index.”

We are now in the midst of a monumental financial crisis that has Already laid low every other major economy but China’s. And the last time we had something similar, We had a recession.

Any one of those items should have caused a recession.

All 3 combined should cause a rather significant depression.

The US Economy is not in a Depression, and while we may be on the verge of a recession, we are not into it yet.

These facts are not possible without an impossible powerful economy.

Conclusion: You bet your ass the fundamentals of this economy are strong.

Now can we please stop trying to find out what it will take to crash our economy?

All this talk about Obama being the saviour, the expert on the economy, the one who would make things RIGHT is ludicrous and extremely laughable.. what is his track record? what has he ever done to deserve such accolade? Obama is a creation of the nauseating american media ably led by cnn and their so called experts.. The questionS to be asked ARE – (1) CAN OBAMA DELIVER? (2) HAS HE CONTRIBUTED ANYTHING POSITIVE DURING HIS SHORT TIME AT THE SENATE? (3) WHY DOES HE SEEM TO BE ASSOCIATED WITH SO MANY SCANDALS? (4) DOES HE HAVE A MIND OR OPINION OF HIS OWN? (5) IF HE DOES, WHY DOES HE FLIP FLOP EVER SO OFTEN? (6) BESIDE’S HIS CHARM AND RETHORIC, WHAT ELSE DOES HE HAVE TO OFFER? (7) WHAT ARE HIS ECONOMIC VIEWS AND HOW HAS HE ADVANCED OR PROMOTED THOSE VIEWS OVER THE YEARS? ( 8 ) HOW DID HE WIN THE 1ST DEBATE, WHEN HE HAPPENED TO AGREE WITH MCAIN 70% OF THE TIME? (9) WHY IS THE US MEDIA SHOWING SO MUCH BIAS FOR OBAMA? ( 10 ) IS HE THE RIGHT MAN FOR THE JOB? ( 11 )IS YOUR DISDAIN FOR MCAIN A TRANSFERRED AGGRESSION FROM YOUR LOATHING OF GEORGE BUSH? (12 ) WHO ARE THE PEOPLE ON THE BALLOT FOR NOVEMBER, ( A) GEORGE BUSH ( B) JOHN MCAIN ( C) BARRACK OBAMA ( D) JOHNMCSAME? (13) IF YOUR ANSWERS TO 12 WERE A & D, WHAT DOES THAT SAY OF YOUR VOTE, IS IT (A) A PROTEST VOTE AGAINST BUSH (B) A VOTE FOR CHANGE REGARDLESS OF WHO THE CLOWN IS ( C ) A VOTE FOR OBAMA BECAUSE YOU KNOW HIM AND TRUST HIS JUDGEMENT (14 ) IF YOUR ANSWERS TO 13 WERE A & B, DO YOU THINK THAT IS A WISE WAY TO CAST YOUR VOTE FOR WHO WILL LEAD YOU IN THE NEXT 4 YEARS? THINK AGAIN, BEFORE YOU CAST THAT VOTE