@Black_Wing

"Federal Reserve controls the money supply. . ."

Precisely. And what is inflation, everyone? An increase in the money supply! And what does the Fed do, everyone? Manipulate interest rates and dilute the value of the American dollar! What's the effect of these monetarist policies? Boom-and-bust cycles that perpetuate suffering and economic instability; in other words, the Great Depression never stopped, it's still rolling along, with the government ensuring its longevity for decades to come!

At any rate, regardless of the distinction between the Fed and the legislators, it hasn't stopped Bernanke from supporting the $700 billion bailout, which I maintain will only /prolong/ recession. We don't need a bailout, the financial institutions that are set to fall /must/ do so. The only thing the financial sector must be rescued from are those institutions that have acquired "bad debt" and continue to consume capital -- in the process preventing /actual/ wealth-generating activities from taking place -- because they're just waiting for the government to give them a handout. It's preventing companies in, not just the financial sector, but other sectors of the economy as well, from expanding wealth.

Recession is not a dirty word, it's a period of economic adjustment. Resources must be re-allocated in accordance with the priorities of society as they presently exist. The rescue package will only rescue those activities which are presently unprofitable and that society /does not want/. Keeping them afloat is a gross inefficiency, and any business manager can clearly see that it is the discontinuance of unprofitable activities -- not placing them on life support -- as the only way to free capital for enhancing current or investing in new profitable activities.

The free market has this remarkable ability to lessen the impact of disruptive economic activity and soften the blow as much as it can. For instance, when Lehman Brothers, a "primary dealer in the U.S. Treasury securities market" (according to Wikipedia) went bankrupt earlier this month, the "largest failure of an investment bank since the collapse of Drexel Burnham Lambert 18 years ago" as reported in the New York Times*, there was no extraordinary breakdown in the fabric of Wall Street. The liquidation did not spell doom for the investment banking industry. Merrill Lynch was in trouble at the same time, but they were fortunate enough to find a buyer. Lehman was not so fortunate. Lehman's demise is a positive development for the market, and the $600 billion plus in assets reported by Lehman in their Chapter 11 filings, not to mention some 20- to 30,000 employees, were free to be reallocated elsewhere within the matrix of market activity. All of this was concluded within the period of a few days.

WaMu was bought by JP Morgan, Bank of America acquired Merrill Lynch, and so on and so fourth; the "bad" or unprofitable aspects of these banking and investment firms will be eliminated, while the "good" or profitable activities will likely be reinforced. This is the free market at work, let it do its goddamn job!

And to shirk the Fed of responsibility, or even to claim that they were the whistleblowers, is quite simply laughable! Are you forgetting, dear Black_Wing, that all of this mortgage lending did not start by itself, but was inspired by the artifically low interest rate which, by the way, was /maintained by/ the Federal Reserve? How short-term is short-term memory? Even if the controls on mortgage lending were in place in, say, the early '00s, but the Fed continued its policy of credit expansion during this period regardless, the bubble would have occurred elsewhere and instead we would have a crisis with banks holding bad debt in areas /other/ than mortgage-based assets. Indeed, the problem could still escalate.

Look, just because you make the banks balance sheets look good on paper by rescuing them from their bad debt, you're not going to fix the credit market. A sound credit market is not defined by lending alone, it's the savings beforehand and the productivity to /fund/ the lending, that allows loans to materialize. There is no real wealth to be lending! You can't print the money at will and say, there, your wealth has been achieved -- printing money /does not/ create wealth! It merely dilutes the value of your currency. If printing money could fix this issue, then world hunger and poverty could have been solved a very long time ago. The crux of the problem /is/ the Fed, and their loose monetary policies, which allowed this situation to ferment into its present form. There has been a long history of consumption which has proved unproductive and thus misallocated real wealth into dead-end investments, and it just so happens that most of these appear to be subprime mortgages lended during a period of artifically low interest rates. I use "artificial" to indicate anything not determined by market conditions.

In a nutshell, you can't blame the mortgage lenders for acting on economic signals, when it is these economic signals that have been distorted and manipulated by non-economic forces. It is your beloved central government that has created so much misallocation, inflation and waste, and now you are trusting it to fix a problem it helped to create.

* "Lehman Files for Bankruptcy; Merrill Is Sold" by Andrew R. Sorkin, published September 14th, 2008 in the New York Times http://www.nytimes.com/2008/09/15/business/15lehman.html?_r=1&hp&oref=slogin

WASHINGTON - The House on Monday defeated a $700 billion emergency rescue for the nation's financial system, ignoring urgent warnings from President Bush and congressional leaders of both parties that the economy could nosedive into recession without it.

Stocks plummeted on Wall Street even before the 228-205 vote to reject the bill was announced on the House floor.

Bush and a host of leading congressional figures had implored the lawmakers to pass the legislation despite howls of protest from their constituents back home. Despite pressure from supporters, not enough members were willing to take the political risk just five weeks before an election.

Ample no votes came from both the Democratic and Republican sides of the aisle. More than two-thirds of Republicans and 40 percent of Democrats opposed the bill.

The overriding question for congressional leaders was what to do next. Congress has been trying to adjourn so that its members can go out and campaign. And with only five weeks left until Election Day, there was no clear indication of whether the leadership would keep them in Washington. Leaders were huddling after the vote to figure out their next steps.

A White House spokesman said that President Bush was "very disappointed."

"There's no question that the country is facing a difficult crisis that needs to be addressed," Tony Fratto told reporters. He said the president will be meeting with members of his team later in the day "to determine next steps."

"Obviously we are very disappointed in this outcome," Fratto said. ". There's no question that the country is facing a difficult crisis that needs to be addressed. The president will be meeting with his team this afternoon to determine the next steps and will also be in touch with congressional leaders."

Monday's mind-numbing vote had been preceded by unusually aggressive White House lobbying, and spokesman Tony Fratto said that Bush had used a "call list" of people he wanted to persuade to vote yes as late as just a short time before the vote.

Lawmakers shouted news of the plummeting Dow Jones average as lawmakers crowded on the House floor during the drawn-out and tense call of the roll, which dragged on for roughly 40 minutes as leaders on both sides scrambled to corral enough of their rank-and-file members to support the deeply unpopular measure.

They found only two.

Bush and his economic advisers, as well as congressional leaders in both parties had argued the plan was vital to insulating ordinary Americans from the effects of Wall Street's bad bets. The version that was up for vote Monday was the product of marathon closed-door negotiations on Capitol Hill over the weekend.

"We're all worried about losing our jobs," Rep. Paul Ryan, R-Wis., declared in an impassioned speech in support of the bill before the vote. "Most of us say, 'I want this thing to pass, but I want you to vote for it

Blame the Democrats.

They forced the companies to loan to poor people with 0% downpayment

Then they added a bunch of earmarks in to the bailout bill, robbing money at the expense of Americans to fund side projects and organizations like Acorn.

THE DEMOCRATS MUST BE FOREVER REMOVED FROM OFFICE! WHAT THEY DO IS TREASON!

well apparently, according to republicans...the bill actually didn't get passed because Pelosi hurt the feelings of republicans just before the vote..

that's not me...that's your party

BW, why would you still have stocks in the market? i pulled all mine out , i told my family to pull theirs out too
it was clear, nothing was guna happen

and as far as the actually core bailout plan, i think it should be really effective
if the government plays it right and smart, they could make a ton of money..and that should help tax payers a lot too..

well, at least this sums up quite nicely the discussions about us economy in the recent months. here's a brief sum-up:

european: "us economy is going to crash like a house of cards very soon."
american: "naa it aint, were doin fine, ur just stupid!"
european: "us economy is going to crash like a house of cards very soon."
american: "naa it aint, were doin fine, ur just stupid!"
european: "us economy is going to crash like a house of cards very soon."
american: "naa it aint, were doin fine, ur just stupid!"
european: "us economy is going to crash like a house of cards very soon."
american: "naa it aint, were doin fi.. HOLY [smoke] LOOK AT DOW JONES!! ABANDON SHIP, ABANDON SHIP!!!"

Glad - I still have stocks in the market - because I'm *still* making money.  And there are *still* a ton of buying opportunities.  Obviously more than there have been in the last 2 years - when your money was in the stock market and you were happy with it there

Glad.....Im talking real world here.....
50% I have in solid Blue chips.
20% Cash.

You dont run and hide like a European when the going gets tough.

ME, you parked anywhere ??  Or just focusing on futures ?

My cousin made an absolute fortung yesterday, playing oil down. 
I got clobbered in a few of my risky stocks......for no reason, other than players ....
.. w/Gladiator Mentality.

@ Lucifuge.....

Bonehead....have you seen the world markets ??
US catches cold, the world gets the Flu......
newb.

LOL @BW and his usual sneeze/cold BS

Tell us BW, what happens when the US shits it pants like its doing now?

Continuing the death spiral, the Dow Jones is now UP 270  haha

Paulson should resign, his approach all summer is to borrow a trillion so his friends don't collapse.  Dr. Evil only wanted $100 billion

Bernanke should resign, he's supposed to do his armtwisting with the Federal Reserve not with Congress

Boehner and Cantor should probably step aside, they represent 1/3 of the party?

FMAC and FMHA must die

Glad
It has been argued for some time, that a COMPETENT speaker can get 90% of teh vote not 60% of the vote...at least that's what we heard when a Republican speaker couldn't deliver 90% of Republicans

BW:
LINE - dividend and I like them, in at 14.70 yesterday
BAC - since 19.50   Took some off, got back on throughout the 32 - 28 fluctuations
WMT - all year
MCD - beginning of march
FRO - in for the run up, missed the drop, back in now
WNR - in since beginning of august, have been in and out of this one all year with really good success, lots of fairly predictable volatility
ALJ - in at same time as WNR, out as of 2 days ago - big refinery of theirs near my house blew up a few months ago, they got it fixed, profit rose while people hated, and life is good again
MA  - Got out of in july - been in since inception - looking at it again
C - since the start of the month
CF - looking at it, not in
CC - looking and laughing at it, not in, may get in - eventually their buildings will be worth more than their market cap, watch for that
CMG - looking at getting in
ACL - been hanging there for the year
EMR - about time to get into it, I do believe
Also very interested in SGR - just to make you angry

That pretty well covers what i've been doing, am doing, and am looking at doing, to some degree.
I'm up 95% for the year (i admit it could have easily gone badly as well, but lucky is fine with me ), currently - so I don't share Glad's pessimism

The american system isn't working. Like I been saying for a long time
Something similar to this was inevitable I'd say.
No rules, companies gotta make more and more profit. In the end it's the citizens who pays, and the country that gets screwed when the big bosses get their billions and ruin their companies. Idiotic and selfish system.