[4Tran]

Originally Posted by solomon

I have a feeling that Wall Street justice will happen MUCH later. Plus while i'm not happy with the plan that Congress is cooking up, I don't see how you can really be against it, I see no alternative rather than temporary gov't intervention.

The only real reason for being against the government intervention is when it ends up being worse than inaction. There is a chance that taking radical action would alleviate the problem, but there are three factors that make that very unlikely:

1. Whatever the plan being proposed, the people running it will be Paulson and Bernanke and the ghost of Greenspan. Their inability to do anything before the crisis although they seem to have known that it was pending inspires no confidence that they can do anything to fix it.
   
2. It's $700B that we're talking about, but the number seems to have been picked out of a hat. This means two things: that it's $700B less to spend when a greater crisis (likely) hits, and that the money will be largely wasted.
   
3. The bailouts being proposed are addressing the wrong problem. Everyone is treating it like a liquidity problem when it isn't. Sure, the banks themselves don't have much cash, but there's plenty of other institutions that do. The reason they're not spending it is because they have no confidence in the financial system, and that's the problem that really needs to be addressed. What this means is that the bailout will purchase all sorts of papers at close to face value, and it'll end up getting people trying to cash out on this deal rather than inspiring any confidence.

Originally Posted by Shin Muhammad

But, why government should spend their money for something the speculator did?
Is it better to stop money speculating than inject a lot of money to save the economy?
I think it just stop problem for now, but later? Who knows?

The main problem is that this financial crisis will spread over into the general economy. Right now, banks are trying not to lend money, and it'll only get worse for the next little while. The real danger is that if foreign investors and central banks get scared, the American economy will go straight into a tail spin.

Speculation is one of the things that will have to get tackled, but that's a long-term fix to prevent this kind of thing from happening again, and won't do much to calm the markets right now. Then again, just injecting a lot of money isn't really the answer either. So far this year, the various American government agencies have already done so to the tune of hundreds of billions of dollars, and it's only been enough to avert immediate catastrophe.

Originally Posted by Xellos-_^

A lot of small business relay on shart term loans to cover expense while they wait to get paid by thier clients. Currently these loans are getting made and that is having a overall down effect on the economy as small business can't get the loans they need.

The reason why the banks are making less of these loans are because they are hard time borrowing money themselves form fund companies and instutation investors. Who are scare silly of making loans.

This is already happening. Caterpillar just took out a couple of $500 million loans, and they were charged much higher interest than they normally would have been. Chinese banks have been advised to stop lending to American ones, and I've even heard that the U.S. government is currently at a greater risk of defaulting on its loans than McDonald's.

Originally Posted by karasuma

"There is no panic on Main Street and in sound financial institutions," he wrote. "The problems are in high-risk financial institutions and on Wall Street."

He said that it is important that "Congress hear from the well-run financial institutions, as most of the concerns have been focused on the problem companies. It is extremely important that the bailout not damage well-run companies." Allison's opinion is seconded by local community-bank officials and community-bank trade groups.

It seems that this mess is already spreading. Caterpillar is about as well-run a major corporation gets, and it's feeling the squeeze. I can only imagine how much this will hurt lesser companies.