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There is something that really bothers me about this whole bailout deal.

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Javaman Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-19-08 01:51 PM
Original message
There is something that really bothers me about this whole bailout deal.
Something is not right. I know the obvious part is that we are paying for it, but there is something deeper more scary about this.

Our dollar is basically worthless right now and they are bailing these corps out with a worthless script.

If they are selling T-bonds to get this money or worse yet using our tax dollars to plug up this tidal wave, isn't just throwing more money after bad?

It's just using play money as the real thing to fix something that that play money caused.

see my point?
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napoleon_in_rags Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-19-08 01:56 PM
Response to Original message
1. Good point. I see something very similar.
My simplified view: People were given loans, on the idea that lots of people would be making enough money to pay them back in the future.

The future has come, and the people don't have the money, so there have been many defaults on home loans.

So to bail out the companies that lost money because the people didn't have money, the government has promised to give them help, which will be funded by taxpayers, aka the people, who we have established don't have any money.
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Virginia Dare Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-19-08 01:57 PM
Response to Original message
2. I don't see how we are not in the second Great Depression as we speak..
the day before yesterday there was a serious run on banks, large businesses and investors pulled their funds out of money markets and started buying up T-bills, then the Fed further devalues our currency by buying up the debt. Prime money funds dropped below $1.

I've never fully understood economics or finance, but, isn't this incredibly, almost unimaginably bad? Just because people aren't falling out of windows yet doesn't mean we aren't in a seriously big pile of deep shit.

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On the Road Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-19-08 01:57 PM
Response to Original message
3. Actually, According to NPR This Morning
Foreign governments, especially in Asia, are reacting to the crisis by moving back in to US dollars and treasuries. When the US sneezes, the rest of the world catches a cold.
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Virginia Dare Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-19-08 01:59 PM
Response to Reply #3
4. But when there is a run on T-bills it devalues them doesn't it?
doesn't this further complicate the problem, people fleeing with their cash?
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Javaman Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-19-08 02:01 PM
Response to Reply #3
5. They are doing this because we are bailing out the banks?
and again, how does that given inherent worth to the dollar?

roughly 4 trillion dollars of our debt is owned by foreign nations, if we are that deep in debt and the dollar is flat on the value scale, does buying up more dollars give it a new false sense of value?

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On the Road Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-19-08 02:04 PM
Response to Reply #5
6. They are Doing it Because No Investment is Completely Safe
and the US is still seen as a relatively safe haven. Overall debt is going south, but it's still better than most industrialized nations.

As far as your opinion that the dollar is worthless, you might consider that no one involved in handling these trillions of dollars agrees with you.
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Javaman Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-19-08 02:09 PM
Response to Reply #6
9. Well I did go a bit to far when I said worthless, however, it's value has
dropped greatly in the past 2 years without a doubt.

And given that, where do the dollars come from to pay for this, other than the sale of t-bonds to other nations and the tax payers?

And given the weak nature of the dollar, how does bailing out these banks with a weak dollar help things in the long run if other nations are just buying up more of our debt?
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libodem Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-19-08 02:04 PM
Response to Original message
7. Maybe it's the wolves in sheep's clothing phenomenon
I feel kinda sick about the radical right being so holier than thou, so moral and so religious, so fiscally responsible, so against high taxes and for less government, so desperate to get into government offices they profess to loath. For me the cognitive dissonance makes me dizzy, because my head won't stop spinning. I so want to believe that people in authority are honest, don't lie and have our best interest at heart. It's that absolute violation of the public trust that hurts so much. That and they don't care. There is an article circulating on the board about how the conservative mind will cling harder to a false premise, the more you present them with facts to the contrary. We will never get through to them. They are liars, thieves and crooks. We will never get through to them to make them understand. They don't play fair and they don't care. The inability for me to make sense of all this makes me feel virtually mentally ill and self destructive.
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breadwithcircus Donating Member (1 posts) Send PM | Profile | Ignore Fri Sep-19-08 02:05 PM
Response to Original message
8. American Taxpayer: You Owe Federal Reserve Inc. $1,000,000,000,000 Plus Interest
The privately owned Federal Reserve Bank is about to wave its
magic wand and create, with just a few keystrokes, over one
trillion dollars. This money will be lent to the Bush Junta,
at interest of course, in order to solve the crisis currently
engulfing US financial institutions. What is happening, in
summary, is that a few CEO's made billions of dollars on shady
deals, and now a private company called the Federal Reserve is
going to own your great-grandchildren. Milton Friedman roasts
in hell. One trillion dollars divided by three hundred million
Americans comes out to three thousand, three hundred, thirty
three dollars, and thirty three cents a head. That doesn't
include interest. Add that to the debt each American already
owes "The Fed" (note that they are fed, while you
might not be) due to bailing out Freddie Mac, Fannie May, AIG,
Bear Sterns, as well as the payments for the Iraq war, and the
massive borrowing that is done every day so that suburbanites
can buy more plastic crap, not to mention the massive cost of
servicing existing US debt.  By any reasonable standard the US
Government should be bankrupt. They're not because Treasury
Secretary Paulson found someone willing to lend the US what
they need. As usual when it comes to making deals with mafia,
you get the money, but man is it going to cost you! 

This latest bail out was inevitable. Want to know why? Watch
this video and see how the latest crisis will further
consolidate the massive power of Federal Reserve Inc. I wonder
who owns that company? If you're an American, given the amount
of debt your government has handed you, you can be you can be
pretty confident that it owns you.

Money As Debt
http://www.breadwithcircus.com/vid-moneyasdebt.html
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Javaman Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-19-08 02:15 PM
Response to Reply #8
10. Thanks for the reply and welcome to DU! :) nt
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